1.ESE FINANCIAL SERVICES (PTY) LTD v CRAMER

For reciprocity of obligations to exist there must be such a relationship between the obligation to be performed by the one party and that due by the other party as to indicate that one was undertaken in exchange for the performance of the other and, in cases where the obligations are not consecutive, vice versa.Where a plaintiff sues to enforce performance of an obligation which is conditional upon performance by himself of a reciprocal obligation owed to the defendant, then the performance by him of the latter obligation (or, in cases where they are not consecutive, the tender of such performance) is a necessary pre-requisite of his right to sue and should be pleaded by him. Conversely in such a case the defendant may raise as a defence, known as the exceptio non adimpleti contractus, the fact that the plaintiff had failed to perform, or, in the appropriate case, tender performance of, his own reciprocal obligation.In terms of an agreement the plaintiff was to receive payment of an amount on the capital appreciation of the portfolio of shares administered by it. This payment was in no way dependent upon the performance by it of any duties imposed by the agreement. In an action for the payment of this amount, the defendant pleaded, inter alia, that the plaintiff had failed to exercise skill and judgment in the management of the portfolio and therefore had failed to perform its obligations under the agreement. In an exception that such a plea did not disclose a defence,Held, that the defence did not measure up to the requirements of the exceptio non adimpleti contractus and could not be justified.Held, further, that the contention that the plaintiff was not entitled to remuneration because he had failed to execute his mandate failed for lack of reciprocity of obligations. 

2.BK TOOLING (EDMS) BPK v SCOPE PRECISION ENGINEERING (EDMS) BPK

 

It must be accepted that, when a creditor in a reciprocal contract is prevented from fully performing his own counter-performance by the failure of the other party's necessary co-operation, he, despite his own incomplete performance, can claim performance by the other party, but, basically as also in other legal systems, subject to reduction of the performance claimed, namely by the costs which the creditor saves in that he does not have to perform fully in his own counter-performance.It would be useful for a few aspects of the principle of reciprocity and its application by means of the exceptio non adimpleti contractus to be mentioned:1. In contracts wherein reciprocal obligations are created it is basically a matter of interpretation whether the obligations are so closely linked that the principle of reciprocity applies. If, however, no other intention appears, the principle applies by operation of law to certain well known contracts, such as, eg, the contract of sale and locatio conductio operis.2. The sequence of performance and counter-performance also depends upon the contractual provisions. If, however, another intention does not appear, the contractor, in locatio conductio operis for example, must first perform.3. On the ground that the withholding of the thing sold was already regarded in the Corpus Juris as being analogous to the holding of a pledge, one would expect that the exceptio would only apply as a defence until performance was actually made. The right of withholding (the converse of the exceptio) is, therefore, essentially a means of

enforcing the counter-performance. It can fulfil a function similar to retention moneys in a building contract. On the other hand it follows that, as long as performance remains possible and the contract is not cancelled, the other party can still perform. Indeed, this possibility should be related to our doctrine of mora and purgatio morae.4. If the right of withholding is regarded as being analogous to the holding of a pledge, it would entail that a party's own performance could be withheld until the counter-performance is fully made. In the case of locatio conductio operis it is all the more the case that the contractor must fully perform before he is entitled to the contract price.5. According to Voet 19.1.23 the onus is on the plaintiff, when the exceptio is raised against him, to prove that he has in fact performed his side of the contract. Since then, this has apparently never been doubted as far as our law is concerned.It is clear from the decisions in Hauman v Nortje 1914 AD 293, Breslin v Hichens 1914 AD 312 and Van Rensburg v Straughan 1914 AD 317 that the Judges proceeded on the common assumption that on the ground of general principles the employer had a right of withholding in regard to his own performance until the contractor had strictly and fully made his counter-performance. There was also agreement that on the ground of considerations of fairness a contractor should sometimes, despite the principle of reciprocity, be permitted still to claim compensation for an incomplete performance. As that could amount to the employer's right to strict compliance being ended, it is extremely important to determine when the employer, by way of exception, is no longer entitled to his right of withholding. In the three cases mentioned there are at least three points of view, which diverge in principle, to be found. The point of view of C G MAASDORP ADD JA, in the Van Rensburg case at 331, belongs more to cases where there has been a resiling whilst those of Lord DE VILLIERS CJ, in the Hauman case at 297, and INNES JA, in the Hauman case at 304, apply to cases where there has been no resiling. The whole basis of the relaxation of the principle of reciprocity and the recognition of the possibility of instituting a claim for a reduced contract price rests on considerations of fair ness. And, clearly, these considerations can in particular circumstances prescribe that the contractor should still be compensated, even if he knows that he has not fully complied with his obligations. As an equitable solution the point of view of Lord DE VILLIERS is too narrow and the point of view of INNES JA, namely that the Court, in the exercise of its discretion, allows a relaxation of the strict principle of reciprocity where the other party has utilised the partial performance, provides a far more supple and more satisfactory solution. As such the latter must henceforth be accepted and applied.It must be emphasised that according to the point of view of INNES JA the coming into being of the discretionary power of relaxing the principle of reciprocity has no connection whatever with the degree of shortcoming of the incomplete performance. The decisive fact for the coming into being thereof is the utillisation of the incomplete performance by the employer - whether the shortcoming is big or small. The extent of the shortcoming is, at the most, one of the circumstances which can be weighed up in considering the question of fairness which is involved in the exercise of the discretion.It would be desirable in the future simply to talk of a (contractual) claim for a reduced contract price, and to avoid names such as quantum meruit and the language of enrichment liability. It would lead to less confusion and greater clarity. It would also fit in, in the normal case, with the amount whereby the contract price is reduced being equivalent to "such sum as would enable the employer to complete the work in exact accordance with the contract" (per Lord DE VILLIERS CJ in the Hauman case at 299), or, put differently, "the cost of remedying the defects" (per INNES JA in the Hauman case at 305).If the contractor does not succeed in convincing the Court that the has fully complied with his side (of the contract), and he wishes then to claim a reduced contract price, he will have to prove:

   (i)      that the employer is utilising the incomplete performance;   (ii)      that circumstances exist making it equitable for the Court to exercise its discretion in his favour;   (iii)      what the reduced contract price should be, ie what it will cost to bring his performance in order for the purpose of determining by how much the contract price should be reduced.In regard to possible consequential damages (caused by the shortcoming) already suffered and possible damages as the result of the mora of the contractor, the onus of proof will, on the grounds of general principles, still have to rest on the employer. The employer will, probably, have to institute a counter-claim.The decision in the Transvaal Provincial Division in Scope Precision Engineering (Edms) Bpk v BK Tooling (Edms) Bpk varied. 

3.FREDDY HIRSCH GROUP (PTY) LTD v CHICKENLAND (PTY) LTD

The plaintiff was a manufacturer and wholesale supplier of spices and the defendant was one of its customers. The plaintiff manufactured and supplied the defendant with spice packs containing cayenne pepper contaminated with an impermissible colorant, Sudan Red 1, which was unfit for human consumption and banned under the Foodstuffs, Cosmetic and Disinfectant Act 54 of 1972 and the regulations. The plaintiff sued the defendant out of the High Court for payment for the spice packs sold and delivered. The defendant admitted the claim, but pleaded that it was excused from paying the amount claimed or any other amount because it had four counterclaims that in total exceeded the amount of the plaintiff's claim. The defendant had unknowingly used the contaminated spice packs purchased from the plaintiff in the manufacture of certain of its own products, and once the contamination was discovered the defendant and purchasers of the affected products had had to recall and destroy them. The four counterclaims were for the losses allegedly flowing from that recall and destruction. More specifically, the counterclaims were (1) for the moneys paid by the defendant for the contaminated goods; (2) for the defendant's damages for breach of contract; (3) in respect of cessions to the defendant of similar claims for damages by various business entities both local and abroad and which were based on the alleged negligence of the plaintiff in failing to detect the prohibited colorants when there was an obligation upon it to do so (the product liability claims); and (4) for the defendant's direct costs in reshipping and resupplying products that had been sold and were found to be contaminated, and had had to be replaced, and was based on the plaintiff's fault in negligently supplying contaminated goods. The latest claim was couched in delict. Some four years before the incident in question, the plaintiff specially undertook to the defendant that its spice packs would not contain any added colorant. The defence raised by the plaintiff in respect of the first, second and fourth counterclaims was that the parties were bound by the plaintiff's written standard conditions of sale which it claimed precluded the defendant from relying on its causes of action based in contract or delict. The third counterclaim was the subject- matter of the plaintiff's third party proceedings in which reliance was placed on an indemnity which it claimed to have in terms of clause 4.6 of the plaintiff's standard terms and conditions of sale. After a separation of the issues of liability and quantum, the High Court proceeded first to determine the issue of liability. It was common cause that the defendant signed the plaintiff's application for credit facilities and that on the reverse of the application form appeared printing headed 'standard conditions of sale and credit'. On the face of the application for credit facilities appeared the words 'I/we have read the conditions of credit set out on the reverse hereof and agree to be bound thereby'. Immediately below was written the words 'std 

conditions not checked' and thereafter the signature for the defendant. There was a dispute between the parties as to the meaning and consequence of the words 'std conditions not checked'. The defendant argued that they meant, and were intended to mean, that the defendant did not agree to the terms appearing on the back of the form.Held, as to the standard terms and conditions, that it was settled law that a  person who signed a contractual document thereby signified his assent to the contents of the document. Held, further, that the question in the present case was what the reasonable recipient of the credit application would have understood by the hand-written words. Held, further, that the words had to be taken to convey that the person signing the  document had not, to put it at its lowest, appreciated or considered the standard conditions at the time of signature. Without that occurring, it could not be said that the objective reasonable recipient of the credit application form would accept that the defendant agreed to be bound to the standard conditions, irrespective of not having 'checked' those conditions. Once the plaintiff was aware of the added words to the document, as it wasit was incumbent upon it to enquire from the defendant what it intended by adding the words 'std conditions not checked'. It did not do that.Held, further, as to whether the plaintiff supplied defective goods or whether it failed to perform, that a voetstoots clause protecting the seller from all claims relating to latent defects was of no effect when the goods sold did not comply with what was bought in terms of a deed of sale. Held, further, that the defendant's contentions were of substance, and that was another reason for holding that the plaintiff was not entitled to rely on the standard conditions in order to avoid its obligations to the defendant in terms of the contract between them. Held, further, that, in the circumstances, the plaintiff was not entitled to rely on the printed standard conditions to avoid the defendant's counterclaims or to pursue its claim in the third party proceedings. Held, further, as to the product liability claims, that the claims in question were for pure economic loss. As such, the question was whether or not there was a legal duty of care on the part of the plaintiff not to act negligently, vis-à-vis the various distributors of the defendant's products, manufactured using the contaminated spice packs supplied by it to the defendant. Held, further, that the common-cause facts in the present case dictated that there could be no question that there was a legal duty on the plaintiff to make sure, inasmuch as that was possible, that any product it manufactured and supplied complied with South African and international legislation which had as its aim ensuring that such product was fit for human consumption. Held, further, that, in all the circumstances, the duty of care had been established by the defendant, and, if negligence were proved, the plaintiff would be liable for the damages proved by the various third parties. Held, further, as to whether the plaintiff had been negligent, that its admitted failure to test the products for colorants constituted negligence of such a nature that it was sufficient to hold that such negligence was unacceptable and caused the damages claimed in counterclaims 3 and 4Held, accordingly, that the defendant was entitled to rely on all four of its counterclaims for the relief claimed, and that the plaintiff's claim had to be set off against the amounts which were found to be due to the defendant in terms of the counterclaims. The plaintiff's third party proceedings were dismissed 

4.STANDARD BANK OF SOUTH AFRICA LTD AND ANOTHER v OCEAN COMMODITIES INC AND OTHERS

 

The H brothers had, until June 1975, been citizens of and permanently resident in what was then Rhodesia. They were dealers in shares on the Stock Exchange. Between the time when exchange control came into effect in Rhodesia in 1961 and November 1965 when UDI was declared, Rhodesian citizens were permitted to acquire "external securities" by transferring Rhodesian funds outside the country on condition that the scrip was registered in the name of a "specified nominee" and payments were made through an "authorized dealer". After UDI  the Rhodesian Reserve Bank directed that external securities could be acquired and paid for only in Rhodesian currency through a member of the Rhodesian Stock Exchange, which meant that only a "switch" of external securities between Rhodesian residents was permissible. At some stage the H brothers were granted a "dispensation" permitting them to have their portfolio of external securities registered in the name of a South African nominee, viz second appellant, Standard Bank Nominees (Transvaal) (Pty) Ltd, a company incorporated in South Africa and having its registered office in Johannesburg and being the only "nominee company" of first appellant. In terms of this dispensation this company (SBN) acted in respect of the portfolio of external securities of the H brothers as if it were the Rhodesian specified nominee. Instructions were given by the Standard Bank Bulawayo to the Stock Exchange Branch, Johannesburg, of the Standard (Standard Bank SEB). It held the scrip "to the order of Standard Bank Bulawayo". In June 1975 the H brothers emigrated to South Africa. They had been granted "emigrant status' by the Rhodesian Exchange Control (REC) authorities, ie they were considered to be "non-residents" of Rhodesia as from that time. In September 1976, however, it became known to them that Standard Bank (SEC) had been requested by Standard Bank Bulawayo to deliver their shares to it, and that this was about to be done. First respondent  (Ocean) then brought an urgent application interdicting the appellants from doing this and for an order that the shares be delivered to its attorneys. The Hbrothers then intervened as second and third respondents, alleging that, if Ocean was not entitled to this order, they were. The basis of their case was the allegation that the H brothers had sold their shares to Ocean, the terms of this contract being set forth in a letter addressed by Ocean to the H brothers dated 10 November 1975,  Ocean being a Panama company with its directors in Switzerland. It was also alleged that the H brothers had been appointed orally as representatives of Ocean in South Africa, and that pursuant to this appointment and on behalf of Ocean one of the H brothers had caused certain of the shares sold to Ocean to be sold and other shares listed on the JSE to be purchased. A Local Division dismissed the application of Ocean but granted an interdict at the suit of the H brothers. In an appeal the Full Bench by a majority granted Ocean's application and ordered the shares to be delivered to Ocean, together with duly signed transfer documents. In a further appeal, the appellants did not challenge the reasons of the majority of the Full Bench for holding that, on the postulate that the SA Exchange Control Regulations applied to the H brothers, the transaction between them and Ocean had not contravened the SA Exchange Control Regulations and was therefore not invalid. The appellants contended, however, that the H brothers had tacitly by their conduct given a mandate to Standard Bank Bulawayo authorizing it toarrange for external securities to be registered in the name of Standard Bank Nominees and the share certificates to be held by Standard Bank SEB, and that Ocean, as the successor to their rights, had no greater rights than they and was not entitled to have the shares transferred to it.Held, that the transaction, for the purposes of the case, had  to be taken to have effectively transferred to Ocean, by way of cession, whatever rights the H brothers had previously held in respect of the shares.Held, further, that on the sale of the shares to Ocean the company had become by cession the beneficial owner thereof and, subsequently, of all the shares substituted

therefor in terms of switch operations conducted by the H brothers on behalf of  Ocean, its claim being in some respect analogous to the rei vindicatio.Held, further, that the general rule was that an executory mandate could be revoked unilaterally by either the mandator or the mandatory, but, even assuming that, in law, by agreement between the parties, express or tacit, the mandate contended for by the appellants could have been made irrevocable upon the terms contended for, ie that such irrevocability, while it continued, would enable Standard Bank Nominees to continue to be the nominal shareholder, and Standard Bank SEB to continue to hold the shares, there was no evidence to establish any such mandate, either express or implied: The conduct of the H brothers bespoke an intention to abide by the law; but it did not go further and establish unequivocally an intention on their part to bind themselves contractually to an irrevocable mandate and to an arrangement whereby their holding of the external securities would be subject to the restrictions imposed by the Rhodesian Exchange Control Regulations (ECR).Held, accordingly, that the evidence failed to establish the necessary animus contrahendi for the formation of the tacit contracts contended for by the appellants.Held, further, that, as the Rhodesian ECR had not been placed before the Court, in so far as the contract was alleged to bethat the H brothers agreed that they would hold the external securities subject to the ECR, the essential content of such a contract would not have been established by appellants.Held, further, that there was much to be said for the view that the cause of action should be classified, or characterized, as one analogous to the rei vindicatio in respect of property situated within the jurisdiction and that in that event the lex situs (ie South African law) would be the correct lex causae: but even if the claim were to be classified as one relating to the contract, and the proper law of the contract were held to be Rhodesian law, the relevant aspect of the Rhodesian law, viz the ECR, had not been properly proved, the regulations themselves never having been placed before the Court, for, where the relevant foreign law is statutory in nature, then it is the right and duty of the Court itself to examine the statute and to determine the meaning and effect thereof in the  light of the expert testimony, especially where such testimony was of a conflicting nature.Held, therefore, that there was no legal bar to the claim by Ocean, as beneficial owner of the shares, for delivery to it of the share certificates, together with the necessary transfer documents, duly signed: manifestly there was no other party asserting any rights to the shares and, if the appellants were not entitled to withhold them, then Ocean was entitled to have them.The decision in the Transvaal Provincial Division in Standard Bank of SA Ltd and Another v Ocean Commodities Inc and Others1980 (2) SA 175 (T) confirmed.

5.JOEL MELAMED AND HURWITZ V CLEVELAND ESTATES Semble: It is stated in some authorities and cases that a court may hold that a tacit contract has been established where, by a process of inference, it concludes that the most plausible probable conclusion from all the relevant proved facts and circumstances is that a contract came into existence. It may be that in the light of this the traditional formulation of the principle, as it appears in Standard Bank of South Africa Ltd and Another v Ocean Commodities Inc and Others1983 (1) SA 276 (A) at 292B - D (where some authorities are cited in support of it), namely:" In order to establish a tacit contract it is necessary to show, by a preponderance of probabilities, unequivocal conduct which is capable of no other reasonable interpretation than that the parties intended to, and did in fact, contract on the terms alleged. It must be proved that there was in fact consensus ad idem", requires reformulation.

In this regard, however, the following point must be borne in mind: While it is perfectly true that in finding facts or making inferences of fact in a civil case the court may, by balancing probabilities, select a conclusion which seems to be the more natural or plausible one from several conceivable ones, even though that conclusion is not the only reasonable one, nevertheless it may be argued that the infernce as to the conclusion of a tacit contract is partly, at any rate, a matter of law, involving questions of legal policy. It appears to be generally accepted that a term may be tacitly imported into a contract unless the implication is a necessary one in the business sense to give efficacy to the contract. By analogy it could be said that a tacit contract should not be inferred unless there was proved unequivocal conduct capable of no other reasonable interpretation than that the parties intended to, and did in fact, contract on the terms alleged.Assuming (the Court not having decided the point) that it was legally competent for a tacit contract to be concluded by a person with himself, such person acting in two different capacities, and assuming that a tacitcontract may be inferred from such person's conduct and the general circumstances, the Court should in such a case  carefully scrutinize such person's evidence in order to distinguish between statements of fact capable of objective assessment and subjective views as to the matter in issue.Although the dictum of SCHREINER JA in Crookes NO and Another v Watson and Others1956 (1) SA 277 (A) at 291B - C, namely "... in the legal sense, which alone is here relevant, what is not  very appropriately styled a contract for the bendfit of a third person is not simply a contract designed to benefit a third person; it is a contract between two persons that is designed to enable a third person to come in as a party to a contract with one of the other two", appears in a minority judgment, there is nothing inconsistent therewith in the majority judgments and it has generally been regarded as an authoritative statement of the law.The Court held there could not be read into a provision in a  deed of sale of immovable property that "transfer of the property shall be passed to the purchaser by the seller's conveyancers, Joel Melamed & Hurwitz, as soon as..." an intention on the part of the parties to the contract, viz the seller and %the purchaser, to confer upon Melamed and Hurwitz the benefit of being appointed to do the necessary conveyancing work and an intention that Melamed and Hurwitz could, by accepting this "benefit", become a party to the contract. Accordingly, such provision did not amount to a contract for the benefit of a %third party.The decision in the Witwatersrand Local Division in Joel Melamed and Hurwitz v Cleveland Estates (Pty) Ltd; Joel Melamed and Hurwitz v Vorner Investments (Pty) Ltd confirmed. 

6.VENTER AGENTSKAPPE (EDMS) BPK v DE SOUSA  

As a result of an oral mandate given by the respondent to the appellant, a firm of estate agents, to find a purchaser for the respondent's farm, a contract of sale was concluded between the respondent and one K. Clause 9 of the contract provided that the appellant's commission would be payable from the first available cash paid in terms of the contract. K died shortly after conclusion of the contract, which was then cancelled by his executors and a compromise was reached between the respondent and the deceased estate. The appellant thereafter instituted action in a Local Division for payment of the commission which he alleged was due to him as a result of the successful carrying out of his mandate to find a purchaser for respondent's property. The Court a quo granted absolution of the instance against the appellant. On appeal, the Court accepted that commission would only have become payable in terms of clause 9

of the contract when transfer of the farm into the name of the purchaser K had been registered, and that the question which then arose, viz whether the fact that the contract had been cancelled with the result that transfer could not take place, led to the appellant's right to claim commission falling away, depended upon the interpretation of clause 9.Held, that if clause 9 had created a condition which had to be fulfilled before commission would become payable, the appellant could not succeed unless, on the basis of fictual fulfilment, the condition could be regarded as fulfilled. Held, further, that clause 9 did not contain a condition but merely provided for a time when the appellant would become entitled to payment of the commission he had already earned.Held, further, that as a result of the cancellation of the contract of sale it had become impossible that such a time would ever eventuate and that under the circumstances the commission had become due immediately.Held, that as clause 9 was merely a time clause, the appellant was not compelled to rely on the doctrine of fictional fulfilment - his particulars of claim had constituted a valid cause of action.Held, accordingly, that the appeal had to succeed.The decision in the Witwatersrand Local Division in Venter Agentskappe  J (Edms) Bpk v De Sousa reversed. 

7.BENONI TOWN COUNCIL v MINISTER OF AGRICULTURAL CREDIT AND LAND TENURE

 

The breach of a modus attached to a donation (whether remuneratory or not) is, under our present law, more properly regarded as an ordinary breach of contract than as a manifestation of gross ingratitude and the donee who fails to comply with such a modus renders himself liable to the ordinary consequences of a breach of contract, whether the donation to which it is attached is remuneratory or not. The donor has a sufficient interest in the donation to be entitled to recover the gift if the donee fails to comply with the conditions of the modus.The plaintiff had offered certain land to the defendant free of charge "as a school site" and defendant had accepted it "for the purpose of the above-mentioned school". The offer was made in connection with a township application. The land was transferred to the Government on 17 May 1938 and the deed of transfer contained a term that "the ground shall not without the approval of Kleinfontein Estates and Township Ltd. first being had an obtained, be used other than for educational purposes." Since September 1973 the defendant had started to use the property for a purpose other than that stipulated in the modus, viz. by building blocks of flats thereon for the police. When the plaintiff learnt of this breach it revoked the donation and now claimed the retransfer of the land. It was agreed at a pre-trial conference that, should the Court find the modus had been breached, the plaintiff should be paid the bare value of the land in an agreed amount. The defendant had raised as defences the locus standi of the plaintiff and prescription.Held, that the transaction constituted a donation subject to a modus and that consent by the township company alone was not enough to entitle defendant to use the land for flats.Held, further, that, as the modus had been breached, plaintiff was entitled to revoke the donation and had locus standi to sue for retransfer of the land or its value.

Held, further, as no cause of action arose before the defendant had breached the modus viz. September 1973, and as the action was instituted within three years thereof, that the defence of prescription failed.Held, therefore, that the plaintiff was entitled to be paid the agreed bare value of the land. 

8.COERTZEN v GERARD NO AND ANOTHER

The ordinary modalities have different legal effects. A suspensive condition differs from a modus. A suspensive condition imposes no obligation until the condition is fulfilled, whereas a modus imposes an immediate obligation. The statement in Honoré and Cameron Honoré's South African Law of Trusts 4th ed at 33--4 approved. It is often difficult to distinguish a condition from a modal clause, yet there is a clear juridical difference. If by the clause inserted in the contract the parties intended to suspend the performance of the contract, we have to do with a condition. If, on the other hand, the party conferring the benefit intends the contract to be operative at once, but requires the party benefited to give something, or to do or not to do something in consideration of the benefit bestowed, then we are dealing with a modus or modal clause.The statement in Roberts Wessels' Law of Contract in South Africa vol 1 at 440 approved.The Court set out the following general principles and observations regarding the interpretation of an insurance policy: (i) The construction of an insurance policy is question of law. (ii) In interpreting an insurance contract the intention of the parties must be ascertained from the language of the contract. If the language is clear, effect must be given to what the parties themselves said. (iii) The words in the policy must be given their plain ordinary, popular and grammatical meaning unless it is clear from the context that the parties intended them to bear a different meaning. (iv) In order to establish what the parties' intention was by the language used, the Court must look at the policy as a whole rather than to isolated expressions therein also bearing in mind the object of the agreement. (v) Insurance policies, like other business contracts, should be interpreted so as to allow for `business efficacy'. (vi) If the meaning of the policy is not clear the Court may construe it against the person who drew it up - the contra preferentem rule. ]The plaintiff had instituted an action in his personal capacity and in his capacity as curator ad litem to his minor daughter, M, for damages against the defendant in her capacity as the executrix of the estate of the late B. It was alleged that M, an authorised passenger in the vehicle driven by B, had sustained bodily injuries in a collision as a result of the negligent driving of B. B was subsequently killed in another unrelated collision. At all relevant times B had been employed by MCC Contracts (Pty) Ltd (`MCC'), the proprietor of the said vehicle which had been allocated to B for use both in the course and scope of his employment and for private use. At the time of the collision the vehicle had been insured with SA Eagle (`SAE'). The defendant had subsequently caused a third party n otice to be served on SAE in which she had claimed that, in the event of the Court holding that the defendant had been liable for the damages claimed by the plaintiff, the defendant was entitled to a contribution towards such damages from SAE in terms of the policy whereby SAE had undertaken to insure the vehicle and provide an indemnity in respect of passenger liability arising from the authorised use of the vehicle. SAE had excepted to the third party notice as lacking the averments necessary to

sustain an action on the grounds that MCC had been the insured under the policy and was the only party entitled to claim an indemnity from the third party. An extension clause in the policy provided that the third party `will . . . indemnify . . . any person who is driving or using such vehicle on the insured's order or with the insured's permission provided that (a) such person shall as though he were the insured observe, fulfil and be subject to the terms, exceptions and conditions of this insurance insofar as they can apply'. Clause 11 of the policy read as follows: `Unless otherwise provided, nothing in this policy shall give any rights to any person other than the insured. Any extension providing indemnity to any person other than the insured shall not give any rights of claim to such person, the intention being that the insured shall claim on behalf of such person. The receipt of the insured shall in every case be a full discharge to the company (SAE).' The defendant maintained that the modus was the mechanism to assist in deciding whether the extension clause was enforceable. The defendant submitted that B as authorised driver was given the right to claim indemnity from the insurer by virtue of the fact that the extension clause was a modal clause to enforce those rights received under the policy and that he could look to the third party for indemnity. The defendant contended further that the fact that clause 11 provided that claims had to be lodged via MCC did not debar B from taking legal action against the insured himself. The insurance company merely insisted on receiving the claim forms from its insured but it did not say that it could not be sued.Held, that the extension clause was not capable of a construction that it was a modal clause creating a direct contractual nexus between B and SAE: on a careful reading of the extension clause the company (SAE) had said in very simple terms that it `will' (not shall) indemnify drivers provided that (on condition that) they `shall' (not will) bring themselves within the same category as the insured insofar as the terms, conditions, et cetera of the policy were concerned: in other words, they could not `from outside'  H claim against SAE, but had to claim `as though they were the insured': in other words their right to claim was not unconditional. Held, further, that the insured (MCC) and SAE had intended to extend the insurance to employees of the former but in such a manner that they, as the contracting parties, would remain in and keep control over matters; and keep SAE on the one hand ensuring that it did not receive claim forms and/or summonses from `unknown claimants', whilst MCC wished to exercise control over the number and extent of the claims lodged under its policy. In other words, what they had agreed upon was that although the policy was extended to include drivers there had been and remained insofar as claims were concerned only one course or procedure, and that was via the insured so as to limit their respective `claim departments' to themselves. Held, further, that the wording of the extension clause read with clause 11 hadclearly provided that the third party's right of claim including an enforcement thereof, had to be done by the insured, MCC, `the intention being that the insured shall claim on behalf of such person'. Held, further, that the wording of the last sentence of clause 11, which read, `the receipt of the insured shall in every case be a full discharge to the company' (SAE) reaffirmed that the final word had to be spoken by the insured. If the intention had been that the third party could enforce his claim independently of the insured, one would have expected the policy to allow a receipt from him to serve as a full discharge of the company (SAE). Held, further, that there was no room for a suggestion that the extension clause read with clause 11 could be regarded or interpreted as a modal clause with its  accompanying consequences: the crux of the matter was and remained that there was no contractual nexus between B and SAE and that in terms of clause 11 B had no right to seek an indemnity from SAE, the only party entitled to do so being MCC, the insured under the policy.

Held, accordingly, that in all the circumstances the defendant had not shown that she had an enforceable contractual right against the third party and the exception consequently had to succeed.

9.FOURIE v CDMO HOMES (PTY) LTD  

Plaintiff had in November 1973 sold a certain piece of immovable property to defendant. Clause 30 (1) of the alleged contract of saleread: 'This offer is subject to the following condition: That there are pump rights from the stream'. The defendant paid a deposit, took occupation of the property and paid monthly instalments till June or July 1977 when defendant discovered that the property had no pump rights. The plaintiff had instituted action for arrear instalments and the defendant instituted counterclaims for all instalments which he had paid under the contract of sale and for the improvements he had effected. In the magistrate's court judgment was given in favour of plaintiff and the defendant's counterclaims were dismissed. In an appeal to the Provincial Division the decision was reversed in respect of the plaintiff's claim and the defendant's counterclaims were again dismissed. The claim in respect of improvements was abandoned because the value thereof was never properly proved. In an appeal,Held, that when the plaintiff signed the defendant's offer an agreement came into being although it was not a binding contract of sale.Held, further that the condition which was imposed in clause 30 in respect of pump rights had reference to the present time: if there were no pump rights, no obligation came into existence.Held, further, as there were no pump rights, that the so-called contract of sale was not binding.Held, further, therefore, that the alleged seller could not claim the purchase price and the defendant could by a condictio indebiti get the money back which he had paid.The decision in the Transvaal Provincial Division in Fourie v CDMO Homes (Pty) Ltd confirmed in part and reversed in part.  

10. SMALL v SMITH  

Where a warranty is a vital term or a term going to the root of the contract it is in reality a condition of the contract and not a warranty.Once a witness's evidence on a point in dispute has been deliberately left unchallenged in cross-examination and particularly by a legal  practitioner, the party calling that witness is normally entitled to assume in the absence of notice to the contrary that the witness's testimony is accepted as correct. More particularly is this the case if the witness is corroborated by several others, unless the testimony is so manifestly absurd, fantastic or of so romancing a character that no reasonable person can attach any credence to it whatsoever.Where a defendant's plea is based on a transaction not referred to at all in the plaintiff's particulars of claim, the plaintiff ought to file a reply so that the defendant could be in a position to know how much of his case was admitted or denied. An implied general denial is not satisfactory in such a case.Plaintiff as a legal holder of a cheque had sued the defendant for the amount thereof. The cheque represented part of the purchase price of a second hand car sold by the plaintiff to the defendant. In his plea the defendant set up a verbal warranty by the

plaintiff that the car was 100 per cent in good condition. When the defendant tested the car he foundthat it used too much oil and had other defects. When he found the car did not answer to the warranty he stopped payment of the cheque on 29th August, 1953, and informed the plaintiff thereof, cancelled the contract and tendered redelivery of the car. The defendant however continued to use the car until 4th September. The plaintiff filed no reply to the plea. A magistrate's court having entered judgment for the plaintiff, on an appeal.Held, that the implied general denial of the defendant's allegations was unsatisfactory.Held, further, as the car had been sold subject to a warranty or condition, that on its breach the defendant was entitled to repudiate the contract.Held, further, that the plaintiff had failed to prove that the defendant had, with a full knowledge of his rights, formed and exhibited through his acts an intention to adhere to the contract of sale.Held, further, that on the probabilities the defendant had discharged the onus of proving that the defects had existed at the time of the sale.Held, further, that on the facts the defect in the oil consumption was so substantial as to justify the defendant in repudiating the contract.  

11. CINEMA CITY (PTY) LTD v MORGENSTERN FAMILY ESTATES (PTY) LTD AND OTHERS

One of the variable factors in the formula for calculating the purchase price of certain shares in an option to purchase was the date of the municipal valuation roll immediately preceding the exercise of the option. A dispute between the purchaser (the appellant) and the sellers (the respondents) had arisen from the fact that a valuation roll was not 'dated' in any ordinary sense and that mere reference to a roll did not ex facie establish unambiguously one single date as being its 'date'. It appeared that there were four possibly relevant dates, while appellant maintained that the date of certification and signing of the roll, and respondents that the 'effective date' of the roll, was the relevant date for the purposes of the formula.Held, that there was sufficient uncertainty as to the meaning of 'date of the roll' to allow recourse to the surrounding circumstances of the contract, in which regard there was sufficient evidence on record.Held, further, that, according to the general scheme disclosed by the contract, read against the relevant background evidence, the date of the provisional roll would be of more significance than the date of the final roll.Held, further, that in the light of the evidence it seemed obvious that by 'date ofthe roll' the date the parties had had in mind was 1 July of the year concerned (ie the 'effective date').The law relating to the admissibility of evidence of surrounding circumstances in the interpretation of contracts discussed and analysed.Quaere: The question whether the stage of development has been reached (in our law) where the 'open sesame' of uncertainty may be dispensed with as a prerequisite to opening the door to evidence of surrounding circumstances, in either a limited or wider sense, raised but not decided.The decision of the Witwatersrand Local Division in Morgenstern Family Estates (Pty) Ltd and Others v Cinema City (Pty) Ltd confirmed. 

12. JONNES v ANGLO-AFRICAN SHIPPING CO

A written offer by the appellant which had been accepted by the respondent read as follows: 'I hereby offer to sell to you 60 000 ordinary shares of R1 each which I hold in Shucol (Pty.) Ltd. for the sum of R1. This offer is subject to the following conditions, namely: (a) I shall be released from all my obligations under certain guarantees given by me to you' (and three other companies) 'in respect of liabilities of' (four other companies) '(hereafter referred to as 'the Shucol Group'), and (b) you shall indemnify me against any loss or damage I might suffer by reason of any other guarantees given by me on behalf of the Shucol Group, and (c) you shall ensure that the Shucol Group shall (a)..., (b ) credit my account with my salary for the month of February, 1970, and (c) permit me to liquidate my obligation in twelve equal monthly instalments, the first  instalment...' Appellant had unsuccessfully contended in a Provincial Division that 'the (respondent) indemnified the (appellant) in respect of all amounts which had or would become payable by him, as the result of his having incurred the other suretyship obligations', the Court a quo having held that the meaning of the word 'indemnify' in the document was to pay something to a person who had already himself made payment, i.e. that the respondent was not obliged to fulfil its agreement to indemnify the appellant before the appellant had made payment under the guarantees. In an appeal,Held, that the contra stipulatorem rule should not be applied as, on an analysis of the terms of the contract, the more probable meaning of the parties attached to the word 'indemnify' was the following: 'to preserve, protect, keep free from. secure against (any hurt, harm or loss); to secure against legal responsibility for past or future actions or events; to give indemnity to', i.e. in its context it did not mean 'to compensate (a person, etc.) for loss suffered, expenses incurred, etc.' Appeal accordingly allowed with costs.The decision in the Durban and Coast Local Division in Jonnes v.  Anglo-African Shipping Co. (1936) Ltd., reversed. 

13. TOTAL SOUTH AFRICA (PTY) LTD v BEKKER

The respondent was the trustee in the insolvent estate of one V whose estate had been provisionally sequestrated at the instance of the appellant as a counter-application to an application for the stay of a writ of execution against him brought by the appellant. It appeared that V and a company owned by him (T Co) (and which was under provisional judicial management) owed the appellant R2,8 million. An action for the recovery of this amount was settled between the parties and an order of Court was issued in terms of which V was obliged to pay the amount of R2,8 million by 11 June 1986. When V failed to pay, the appellant caused a writ of execution to be issued. The writ was never executed because of V's sequestration on 22 July 1986. Two months previously V had disposed of his shareholding in T Co to a company controlled by a longstanding friend, F. T Co was discharged from provisional judicial management on 19 August and on the following day an agreement was entered into between the appellant and F in terms of which it was agreed that 'subject to the condition that F faithfully carries out the terms of this agreement and performs the obligations herein contained on the due dates thereof, Total agrees that it shall not proceed against V in respect of its claim against V arising out of a settlement which was made an order of Court. . . . In consideration for its undertaking aforesaid, F agrees and undertakes to pay to Total. . . .' In terms of the undertaking F agreed to pay the amount of R60 000 by 1 September and R440 000 in monthly instalments of R10 000 per month as from 7 November 1986. F paid the R60 000 but failed to pay the instalment of 7 November. On 17 November the appellant issued a provisional sentence summons against F for the amount of R440 000. A Local Division dismissed the application for a stay in these circumstances and granted the

counter-application for the provisional sequestration of V. An appeal against this decision to a Provincial Division was successful and the Court granted the stay pending the institution of an action to set aside the writ. The Provincial Division held that the appellant was obliged to elect to proceed against either F or V and that once it had elected to proceed against F after he had breached his obligations under the agreement it could not have reverted to its claim against V. In a further appeal it was contended on behalf of the respondent, firstly, that the order of the Court a quo was not appealable as it was a decision on a purely interlocutory matter and, secondly, that V had become a party to the agreement either in that it was an implied term of the agreement that V would become a party thereto or that clauses 1 and 2 thereof constituted a stipulatio alteri for the benefit of V.Held, that the decision of the Provincial Division on appeal from the decision of the Local Division reversing the decision of the latter Court in refusing a stay was 'a judgment or order . . . given on appeal' as envisaged by s 20(1) of the Supreme Court Act 59 of 1959 and was appealable.Held, further, in respect of the argument that it was an implied term of the agreement that V would become a party to the agreement, that there were no allegations to support this but that it was specifically hit by clause 8 of the agreement which expressly excluded any implied term not recorded in the agreement.Held, further, with respect to the argument that the agreement constituted a stipulatio alteri in favour of V, that the agreement disclosed no intention on the part of the appellant or F that V would  become a party thereto nor was there any allegation by V that the parties intended a stipulation in his favour.Held, further, that the Court of first instance had correctly interpreted clauses 1 and 2 as constituting a conditional pactum de non petendo - an undertaking not to sue V conditional upon the due and punctual performance by F of the obligations imposed on him: when F breached the terms of the agreement the condition to which the pactum was subject failed and the appellant's undertaking not to sue V lapsed;  and this left the appellant free to recover from V his outstanding indebtedness and at the same time it was entitled to enforce performance by F of his obligations under the agreement.Held, further, that there were two separate and distinct rights of action each with its own valid causa and no question of election arose.Held, further, that despite the use of the word 'intercede' in the preamble to the agreement there was no question of the existence of an intercessio as used in the Roman law or the related concept of expromissio: clauses 1 and 2, whether taken alone or in the context of the agreement, were not open to the interpretation that F assumed V's debt to the appellant and such interpretation flew in the face of the clear and unambiguous wording of the clauses.Held, accordingly, that the respondent had failed to establish that there was no valid causa for the issue of the writ and that it followed that the Court of first instance had correctly dismissed the application for the stay thereof. Appeal upheld.The decision in the Transvaal Provincial Division in Bekker NO v Total South Africa (Pty) Ltd 1990 (3) SA 159 reversed.

14. ARPRINT LTD v GERBER GOLDSCHMIDT GROUP SOUTH AFRICA (PTY) LTD

BD and his brother were the directors of the appellant company.BD was also a director of the S company.

BD had stood surety for a debt owed by the S company to the respondent company.The S company was subsequently liquidated.When BD was called upon to meet the debt and failed to do so, he was sued by the respondent.BD then signed a consent to judgment in a certain amount.After protracted negotiations between the parties, the respondent was eventually furnished with 36 promissory notes, each made by the appellant company in favour of BD and endorsed by him.The first note presented was met, but thereafter, because the appellant had stopped payment of the remaining notes, each note was dishonoured on presentment.On the dishonouring of each of the second to 25th note, the respondent sued and obtained provisional sentence, initially suing both the appellant and BD, but later, after BD's estate was sequestrated, only the appellant was sued.When provisional sentence was granted on the 26th promissory note, the appellant entered the principal case and, for the first time, relied on a condition, contained in the letter with which the promissory notes were sent to the respondent's attorneys after they had been made.The condition stipulated that "in the event of any legal action being instituted against BD by (the respondent), then the promissory notes will not be paid".The trial Court interpreted the condition as having nothing to do with any legal action on the promissory notes themselves, and rejected the defence, as a result of which the provisional judgment became a final judgment against the appellant.In an appeal, The Court held, that the ordinary grammatical meaning of the words in the condition was that, if (a) the respondent (b) took legal action (c) against BD, (d) the money would not be paid.The Court held, further, that there was nothing in the facts or circumstances in the context of the history of the matter which lent support to the submission that the word "any" in the condition was not used by the party in its ordinary and natural meaning.The Court held, accordingly, that the words "any legal action" could not be made to mean "only a particular legal action" or "only a legal action on an existing cause of action".The Court held, further, as to a contention that the circumstances of the case provided a fitting setting for the application of what was in essence equitable relief, namely the exceptio (in this case the replicatio ) doli, that this exceptii (or replicatio ) could not be employed to alter the terms of an agreement validly entered into between the parties.The Court held, accordingly, that the appellant's defence succeeded and the appeal had to be upheld.The decision in the Durban and Coast Local Division in Gerber Goldschmidt Group South Africa (Pty) Ltd v Arprint Ltd reversed.

15. LIST V JUNGERS

It is an unrewarding and misleading exercise to seize on one word in a document, determine its more usual or ordinary meaning, and then, having done so, to seek to interpret the document in the light of the meaning so ascribed to that word.Apart from the fact that to decide on the more usual or ordinary meaning of a word may be a delicate task, it is clear that the context in which the word is used is of prime importance.Plaintiff had sold tohis share in a boat for 4 000 000 Belgian francs payable in four equal instalments in July and December 1969 and April and July 1970.

The agreement provided for payment of interest at the rate of 13 per cent in the event of payment being more than three months overdue.Thereafter, on 22 May 1970, defendant wrote in a letter to plaintiff as follows: "On behalf of this company and on my own personal behalf,hereby warrant and guarantee that the purchase price due to you in respect of the purchase of your joint interest within the 119 units in the MariaMartina will be paid to you by the end of December 1970.Yours faithfully, Jamy Fishing and Drying Corporation (Pty) Ltd (Signed) K W R List".had as a fact acted as nominee for that company in buying the plaintiff's share in the boat.The company having failed to pay the purchase price as agreed, and having been wound up, plaintiff sued defendant on 15 August 1974 for the balance outstanding plus interest.Defendant contended (a) that the letter did not create a valid agreement on the grounds that it did not comply with s 6 of Act 50 of 1956 by reason of the omission of the name of the person whose debt was guaranteed; (b) that the claim was prescribed on the ground that the prescription period of three years had begun to run on 1 January 1971.The Court granted judgment in favour of the plaintiff with interest at the rate of 11 per cent per annum.In an appeal,The Court held, that the word "guarantee" in the letter should not be looked at in isolation: when the word was looked at in its context, it was not used in the sense of an undertaking to stand surety for another's obligation.The Court held, accordingly, that the appellant had bound himself as a principal debtor and not as a surety.The Court held, further, as the undertaking was not conditional, that the debt arose before 1 December 1970 when the Prescription Act 68 of 1969 came into force; accordingly the provisions of the South-West African Proclamation 18 of 1943 applied (MULLER JA dissenting).The Court held, further, that the debt only became prescribed in six years in terms of s 3 (2) (d) of the Proclamation.The Court held, further, that the Prescribed Rate of Interest Act 55 of 1975 did not apply as that enactment, in terms of s 1 (1) thereof, applied only where a debt bore interest and the rate thereof was not governed, inter alia, by agreement.The Court held, further, as the agreement provided for interest at the rate of 13 per cent, that the respondent was entitled to that rate.The Court held, further, since respondent had waived the additional 2 per cent to which he was entitled, that the rate of interest, ordered by the Court a quo, would remain unaltered.The decision in the South-West Africa Division in Jungers v List confirmed.

16. JOHNSTON v LEAL

Section 1 (1) of the Formalities in Respect of Contracts of Sale of Land Act 71 of 1969 requires that the whole contract of sale, or at any rate all the material terms thereof, be reduced to writing.It is not necessary that the terms of the contract be all contained in one document, but if there is more than one document, these documents, read together, must fully record the contract.The material terms of the contract are not confined to those prescribing the essentialia of the contract of sale, viz the parties to the contract, the merx and the pretium, but include, in addition, all other material terms.Generally speaking these terms - and especially the essentialia - must be set forth with

sufficient accuracy and particularity to enable the identity of the parties, the amount of the purchase price and the identity of the subjectmatter of the contract, as also the force and effect of other material terms of the contract, to be ascertained without recourse to evidence of an oral consensus between the parties.This denial of recourse to evidence of an oral consensus applies to earlier, contemporaneous or subsequent oral agreements.The result of non-compliance with s 1 (1) is that the agreement concerned is of no force or effect.It is void ab initio and cannot confer a right of action.As to the policy underlying s 1 (1) the reason why the Legislature selected, inter alia, contracts for the sale of land for such special treatment as far as formalities of contract are concerned was, no doubt, that it recognised that such contracts are generally of considerable value and importance and that the terms and conditions attached thereto are often intricate.Where a printed contract of the purchase of land contains blanks relating to material terms - or what would be material terms if incorporated in the contract - it is vital to know why the blanks were left in the printed form, or, in other words, to know whether (1) the parties did not intend the blanks to form part of their contract; or (ii) they intended the clause containing the blanks to form part of their contract but that at the time when the contract was signed the essential particulars had not yet been settled and these particulars were consequently left open for future agreement between the parties or (iii) the parties intended the clause to form part of their contract and agreed upon the particulars in question, but for some reason they omitted to fill these particulars into the blank spaces.The parol evidence rule is not a single rule.It in fact branches into two independent rules or sets of rules: (1) the integration rule, ie the rule which prevents a party from altering, by the production of extrinsic evidence, the recorded terms of an integrated contract in order to rely upon the contract as altered, and (2) the rules, or set of rules, which determines when and to what extent extrinsic evidence might be adduced to explain or affect the meaning of the words contained in a written contract.From the terms of a written deed of sale entered into between the respondent and appellant in respect of the sale of certain land it was apparent that (a) the parties to the contract were defined, (b) the property was defined, (c) the price was fixed and certain, (d) the manner and time of payment were clearly stated, and (e) the date of occupation by the purchaser (appellant) was fixed.Clause 11 of the deed provided, however, that the agreement between the parties "shall be subject to the suspensive condition that the purchaser...is able to raise a loan upon the security of a first mortgage bond to be passed over the property for a sum of not less than R......(the amount having been left blank) at prevailing building society rates...Should such loan not be procured by...(the date having been left blank) this sale shall be automatically cancelled and of no force or effect..." Alleging that she had cancelled the contract by reason of the appellant's breach thereof, the respondent (seller) claimed, inter alia, payment of a certain amount as damages.In an amended plea the appellant alleged that, as the amount of the loan and the date by which it had to be procured were left blank in clause 11 of the contract, the contract was, by reason of s 1 (1) of the Formalities in Respect of Contracts of Land Act 71 of 1969, void and of no force and effect.The respondent excepted to the plea which exception was upheld.In an appeal,

The Court held, that the question why the parties did not fill in the blanks in clause 11 was vital to the validity of the contract.The Court held, further, that the question could not be resolved only by a consideration of the written deed of sale.The Court held, further, that extrinsic evidence was admissible in order to resolve this question and thus determine the validity of the deed of sale.The Court held, therefore, that it was desirable that the parties be given the opportunity of leading such evidence.The Court held, further, that this extrinsic evidence might relate to all relevant surrounding circumstances, including the negotiations leading up to and at the time of the signing of the deed.It might be relevant to know whether the deed was first signed by the purchaser and then submitted as a written offer to the seller or whether both parties, having reached an oral consensus, had signed the document together.The Court held, further, that the issue of compliance with s 1 (1) of the Act could, and should, not have been decided on exception.The decision in the Witwatersrand Local Division in Leal v Johnston 1978 (4) SA 706 reversed.

17. DELMAS MILLING CO LTD v DU PLESSIS

Per SCHREINER, J.A., HOEXTER, J.A.and FAGAN, J.A., concurring.There are three broad classes of evidence that are usable in different kinds of case in which documents fall to be interpreted.Where, athough there is difficulty in interpretation but it can nevertheless be cleared up by linguistic treatment this must be done, the only permissible evidence in such cases being of an identificatory nature.If the difficulty cannot be cleared up with sufficient certainty by studying the language, recourse may be had to 'surrounding circumstances', iematters that were probably present to the minds of the parties when they contracted (but not actual negotiations and similar statements).The third class of case is where even the use of surrounding circumstances does not provide 'sufficient certainty'.These are cases of ambiguity in the narrow sense, where after the surrounding circumstances have been considered there is still no substantial balance in favour of one meaning rather than another.In these cases recourse may be had to what passed between the parties on the subject of the contract.The Court must use outside evidence as conservatively as possible but it must use it if it is necessary to reach what seems to be a sufficient degree of certainty as to the right meaning.In June, 1953, a document was signed on behalf of appellant company, and by respondent in confirmation, as follows: 'We beg to confirm the purchase of 2,750/3,250 bags new season kidney beans as inspected on farm S; Price 80/ - per bag of; Terms 200 lbs nett delivered.Delivered in good order and condition at Delmas Milling CoMills at Delmas.For delivery up to the 10/7/53.Failing delivery within the prescribed time the above price is subject to adjustment.All deliveries must be in accordance with grades specified above.

Please note that all conditions mentioned herein must be strictly adhered to.Payment on delivery at mill.' The portion italicised was in writing: the remainder of the document was printed.In a declaration claiming damages arising from an alleged breach of the contract on the part of the respondent, appellant company had alleged that, at the respondent's request, it had extended the date of delivery to 20th July, 1953, that the respondent had duly delivered 1,000 bags of beans and that he had refused to deliver any further bags of beans.Appellant claimed damages in respect of the respondent's failure to deliver the balance of 1,750 bags of beans.Respondent had pleaded that, having delivered 1,000 bags before the stipulated date, he was obliged to deliver any balance due under the contract only upon an adjustment of the contract price being arrived at by mutual agreement and that despite demand appellant had refused to agree upon a mutual adjustment of the price.Appellant had excepted to this plea and applied to strike out certain portions thereof.The disputed clause was the sentence beginning 'Failing delivery'.A Provincial Division having dismissed both the exception and the application to strike out, in a further appeal,The Court held, per CENTLIVRES, C.J., VAN DEN HEEVER, J.A., concurring, that the effect of the disputed clause was to make the contract an option to sell.The Court held, further, if the contract was to be construed as a contract of purchase and sale, that the clause was inserted for the benefit of the respondent and in those circumstances he could not be said to be taking advantage of his own wrong, in failing to deliver by the stipulated date, when he relied on the clause.The Court held, further, as there was no ambiguity as regards the meaning to be placed on the disputed clause, that evidence of surrounding circumstances could not affect its plain meaning.The Court held, per SCHREINER, J.A., HOEXTER, J.A.and FAGAN, J.A., concurring, regard being had to the word 'purchase' being inconsistent with a mere option to sell, that when there was a serious difficulty in interpreting a contract and the Court was not obliged to decide the matter on exception, it should not do so.The Court held, further, per HOEXTER, J.A., SCHREINER, J.A.and FAGAN, J.A., concurring, that the exception to the plea was rightly dismissed on the ground that the contract was capable of being construed as a mere option to sell and not on the ground that it was incapable of any other meaning.The decision in the Transvaal Provincial Division in Delmas Milling CoLtd v du Plessis, confirmed.

18. SWART EN 'N ANDER v CAPE FABRIX (PTY) LTD

When a Judge has given his approach to construction in general, it is always useful to look at the facts with which he had to deal and on which his approach was based.What must naturally be accepted is that, when the meaning of words in a contract have to be determined, they cannot possibly be cut out and pasted on a clean sheet of paper and then considered with a view to then determining the meaning thereof.It is self-evident that a person must look at the words used having regard to the nature and purpose of the contract, and also at the context of the words in the contract as a whole.

Appellants had each signed a deed of suretyship in the same terms reading: "I, the undersigned, (appellant), do hereby bind myself as surety and co-principal debtor in solidum for the due payment by (a company) of all amounts due for goods purchased from (respondent)".When respondent applied for summary judgment against them in a certain amount, the appellants alleged that the deeds of suretyship only applied to amounts owing at the time of signature thereof.The Court refused summary judgment.At the trial of the action judgment was granted in the amount claimed which included amounts which became due after the signing of the deed of suretyship.In an appeal, the respondent conceded that, insofar as the wording was concerned, the deeds of suretyship were capable of more than one meaning and ambiguous and that extrinsic evidence was admissible to determine the intention of the parties, but it was contended that the trial Judge had correctly summed up the surrounding circumstances.The Court held, that a careful study of the evidence of the appellants induced the Court to agree fully with the finding of the trial Judge.The decision in the Cape Provincial Division in Cape Fabrix (Pty) Ltd v Strand Carpets (Pty) Ltd and Others 1977 (4) SA 157 confirmed.

19. GROBBELAAR v VAN DE VYVER

Semble: Partial exclusion of the marital power in an ante-nuptial contract is legally possibleThe instrument of interpretation denoted by ejusdem generis or noscitur a sociis must always be borne in mind where the meaning of general words in association with specific words has to be ascertained, but what is often a useful means of finding out what was meant by a provision in a contract or statute must not be allowed to substitute an artificial intention for what was clearly a real one.Appellant, having exercised the option granted to him by the respondent to buy her share of a certain farm, sued for an order declaring that a binding contract of sale had been concluded, and for the fulfilment of the contract.The respondent, who was married without community of property, had pleaded in bar that the option which had been signed by her without the assistance of her husband had not been validly executed and was of no force and effect as the marital power had not been excluded in her ante-nuptial contract.Clause 4 of the ante-nuptial contract provided 'that each of the said intended consorts shall be at liberty to dispose of his or her property and effects by will, codicil, or other testamentary disposition, or in any other manner, as he or she may think fit, without the hindrance or interference in any manner of the other of them'.Provincial Division having dismissed an exception taken to the plea as being bad in law and as disclosing no defence, on an appeal,The Court held, as the clause meant that the respondent could dispose of her farm without the assistance of her husband, that the exception should have been upheld.The decision in the Cape Provincial Division in Grobbelaar v van de Vyver, reversed.

20. LEGOGOTE DEVELOPMENT CO (PTY) LTD v DELTA TRUST & FINANCE CO

In an action in which the seller of a licensed hotel as a going concern claimed mora interest on an amount of R60,000 for which a guarantee had in terms of clause 3 (c) of the deed of sale to be furnished on 15th August, 1964 - 'by which date the seller's conveyancers shall be ready to lodge their documents ...' - but which had only been furnished some considerable time thereafter, the seller alleged that, due to this delay occasioned by the defendant and other delays which had held up the registration of transfer for 68 days, he had lost the interest referred to, viz.R670.65.In an appeal from a decision in a magistrate's court granting absolution from the instance in respect of this claim, it appeared from the terms of the agreement that the parties had clearly intended the date, 15th August, 1964, to be a certus dies adjectus, and that, if the purchaser did not perform on that day - perform in the sense of providing the requisite guarantee and furnishing the seller's attorneys or their correspondents with all the necessary powers of attorney and other properly executed and signed documents - the maxim dies interpellat pro homine would apply.The lex commissoria provided for in clause 13 added force to this view.The seller had also satisfactorily proved that the purchaser had been responsible for whatever delay there had been in signing and preparing the necessary deeds for simultaneous lodgment, and that the seller's attorneys would, but for such delay, have had the papers ready timeously.The Court held, that, in a case such as the present, the seller need not have alleged or proved that the debtor was wilful or negligent in not performing timeously.The Court held, further, as time was of the essence and the purchaser was in mora ex re, that the seller had been entitled to judgment in its favour in the amount claimed, together with costs.

21. RANCH INTERNATIONAL PIPELINES (TRANSVAAL) (PTY) LTD v LMG CONSTRUCTION (CITY) (PTY) LTD;

LMG CONSTRUCTION (CITY) (PTY) LTD v RANCH INTERNATIONAL PIPELINES (TRANSVAAL) (PTY) LTD AND

OTHERS

Speaking of building contracts generally, it cannot be said that a unilateral right of stoppage (by the employer of a builder's performance of his obligations and in the absence of any breach by the builder) is tacitly agreed upon.Upon a rational discussion of the problem, the parties could have resorted to any number of solutions or regimes designed to avoid the kind of impasse between employer and builder (or between contractor and subcontractor, as in this case) which such a tacit term might prevent, and it cannot be said that such a term is necessary to give business efficacy to such contracts.In any event the overriding consideration, postulating a builder who is not in breach of contract, is that the impasse is of the employer's own making and it is for him to unmake it.Approaching the problem, as one should, by reference to the doctrine of mora creditoris, it is clear that there is a duty implied by law, namely the employer's duty to co-operate with the builder so as to enable the latter to fulfil his obligations and not to prejudice him in his efforts to fulfil his bargain.

Should the employer fail in this duty, he is in mora.As regards the remedies available to the builder in this event, specific performance is a remedy to which the builder is entitled as of right and, while the Court has a discretion, it cannot be withheld arbitrarily or capriciously.The employer may thus be compelled in forma specifica to co-operate with the builder.The Court's difficlty in supervising the performance is traditionally in the forefront of the objections to such an order, but this difficulty would appear to be imaginary rather than real.In the instant case the Court, guided by the above considerations, granted the builder (who claimed its right to perform and sought only its employer's co-operation to make this possible) a rule nisi operating as an interim interdict restraining the employer (who had sought to evict the builder) from interfering with the builder's performance of his duties.(There was a conflict on the papers as to whether or not the builder was in breach of its obligations, but the matter was argued, and adjudicated, upon the basis of the employer's contention that, regardless of whether or not the builder was in breach, an employer under a building contract generally has a right of unilateral stoppage.The Court issued a rule nisi, as opposed to a final order, so as to allow the employer still to contend, on the return day, that it was for some valid legal reason entitled to resile from the contract.)

22. MARTIN HARRIS & SEUNS OVS (EDMS) BPK v QWA QWA REGERINGSDIENS;

QWA QWA REGERINGSDIENS v MARTIN HARRIS & SEUNS OVS (EDMS) BPK

Mora creditoris occurs when the debtor cannot perform without the co-operation of the creditor.For mora creditoris to exist it is necessary that the debtor calls upon or demands from the creditor the required co-operation.(Such demand is not necessary where either the agreement or the creditor has prescribed a time for performance by the debtor - and thus a time for co-operation by the creditor.) That there is a duty on the creditor to provide the necessary co-operation does not mean that the creditor immediately commits a breach of the contract by not delivering it timeously or at all.The duty only means that the creditor can be called upon to co-operate.There can only be talk of breach of contract by mora creditoris where such a demand has in fact been made.

A building contract provided that the appellant would be paid after a progress certificate was issued by an architect in respect of work already performed by the appellant.Such certificates were issued in favour of the appellant during the currency of the contract and the appellant was paid for them.Within three years of the work as a whole being completed, but more than three years after the individual work was done, the appellant instituted action for the balance which it claimed was owing to it.The respondent alleged that the claim had prescribed because prescription began to run when each separate piece of work had been completed.The Court held, that the mere completion of a specific subdivision of the work did not entitle the appellant to payment therefor, regardless of any certificate of payment.

Only upon completion of the work as a whole would the appellant be entitled to payment.In the mean time, the issuing of progress certificates was merely a contractual mechanism or method to place the contractor in a position to finance the continuation and completion of his work.The issuing of a progress certificate by an architect was normally (but, depending on the provisions of the agreement, not essentially) a condition for the contractor to receive payment before final completion of the work as a whole.Without that he would have no right to payment and any claim would be met with the exceptio non adimpleti contractus.If a certificate was issued, the appellant's claim would rest upon the certificate itself, as a separate and self-supporting cause of action which could only be challenged on limited grounds, such as when the employer, after delivery of the certificate but before payment thereof, cancelled the contract on the grounds of the contractor's breach of contract.The delivery of a certificate in this case was a condition for payment before completion of the work as a whole.

The Court held, accordingly, that the position could be summarised as follows: (1) where a contractor, who was in the appellant's shoes, had completed work and applied for the issuing of a progress certificate, his claim for payment of the percentage of the value of the work (retention excluded) for which the contract made provision and which the architect had certified arose only when the certificate was issued to him; (2) the contractor was only entitled to claim for the balance of the payment which was either not certified or which was disputed and which was not accommodated in a later certificate when the entire job had been completed.Where the contractor did not immediately apply for a progress certificate, it merely meant that he had not demanded earlier payment.Prescription of the appellant's claim for payment of the portion of the work, as for all other portions which had not appeared in any certificate, began to run at the earliest when the work as a whole was completed.The decision in the Orange Free State Provincial Division in Martin Harris & Seuns OVS (Edms) Bpk v Qwa Qwa Regeringsdiens; Qwa Qwa Regeringsdiens v Martin Harris & Seuns OVS (Edms) Bpk confirmed.

23. ERASMUS V PIENAAR 1984 (4) SA 9 (T)

Applicant and respondent entered into a written agreement whereby applicant sold a farm to respondent, the purchase price of which was payable in annual instalments.On non-payment of one of the instalments the seller could in terms of the agreement cancel the contract 30 days after the purchaser had received a notice to pay the arrear instalment.One of the payments was not paid in time and on 19 July 1983 the respondent received a notice from the applicant in terms of which he was informed that if he failed to pay the arrear instalment within 30 days the agreement would thereby be cancelled.Negotiations were held between the parties and on 29 July respondent's attorney wrote to the applicant that the arrear payment had been paid to him in trust and would be paid to her on certain conditions.Applicant's attorneys had in the interim (on 26 July), written to the respondent informing him that the agreement was regarded as cancelled and this attitude was confirmed in a further letter dated 10 August.

In an application for an order of ejectment on the ground of breach of contract (because of the non-payment of the annual instalment as well as the non-fulfilment of another clause of the agreement) the Court accepted that it was in order for the applicant to embody the notice of cancellation in the letter of demand which respondent received on 19 July.The respondent contended that the applicant had repudiated the agreement by her letter of 10 August and it was accordingly not necessary for him to perform thereafter.The Court found that the letter dated 10 August did in fact amount to a repudiation of the contract and held further that the effect of such a repudiation in our law was that the purchaser's (respondent's) obligation actually to perform was suspended for as long as the seller (applicant) repudiated the agreement, provided that the purchaser was at all times willing and able to meet his obligations and his readiness, willingness and ability to perform came to the attention of the seller.It was found on an application of this rule that the respondent was at all times after the repudiation, ready, willing and able to meet his obligations and that the applicant was aware of this.It was accordingly not necessary for him in fact to pay the arrear instalment or to tender it, as the applicant had repudiated the agreement.Applicant could therefore not rely on respondent's failure to pay or tender as a basis for the cancellation of the agreement.The Court however found that the respondent had, as contended by applicant, breached the other provision of the agreement and on this basis the order for ejectment was granted.

24. GENWEST BATTERIES (PTY) LTD v VAN DER HEYDEN AND OTHERS

The first, second and third respondents, natural persons, had in restraint of trade agreements undertaken, inter alia, not to compete with the applicant directly or indirectly through any company and had also undertaken that such competing company would not operate for their direct or indirect benefit.The first to third respondents breached the undertaking through two companies, the fourth and fifth respondents.The fourth and fifth respondents were, however, not parties to the restraint of trade agreements.The applicant obtained interdicts against the first to third respondents and sought interdicts against the fourth and fifth respondents as well.It appeared that the fourth and fifth respondents were controlled by one or other of the first to third respondents.The sole director and shareholder of the fourth respondent was the first respondent's wife, to whom he was married in community of property.The fifth respondent was a joint venture between the first to third respondents and the sole director and shareholder of the fifth respondent was the first respondent's aforementioned wife.The Court held, on the facts, that there was a reasonable apprehension that the fourth and fifth respondents would continue competing with the applicant as they had done.The Court held, further, that such competition would amount to intentionally assisting in breaching the restraint of trade undertaking.The Court held, further, that such assistance was wrongful and could be interdicted, and the manner in which the assistance was rendered, viz by trading in competition with the applicant, could be interdicted too.

The Court held, further, however, as changes in the control of the fourth and fifth respondent might so sever the relationship between them and the first three respondents that the unlawful effect of their trading in competition with the applicant might cease, that fourth and fifth respondents should be granted leave to approach the Court for the discharge of the interdict against them in the event of such changes occurring.Interdicts granted accordingly.

25. MAHABEER v SHARMA NO AND ANOTHER

Apart from the law relating to prescription, there is no principle of South African law that justifies a conclusion that a right may be lost through mere delay in enforcing it and no reason exists for holding otherwise in the case of the right to cancel an agreement (in this case, an agreement for the sale of land).Whilst there can be no quarrel with the statement, as far as it goes, that the right to cancel an agreement must be exercised within a reasonable time, it does not follow that failure to exercise the right within such a time results ipso iure in its loss.Depending on the circumstances, such a failure may, eg, justify an inference that the right was waived or, stated differently, that the party entitled to cancel has elected not to do so, or it may open the door to some other defence.In such a case the lapse of an unreasonably long time forms part of the material which is taken into account in order to decide whether the party entitled to cancel should or should not be permitted to assert his right.Quaere: whether, in a case where a party to a contract alleges that the innocent party (in the case of a breach of the contract) has waived the right to cancel the contract, the enquiry relates, not to the innocent party's actual decision or election whether to cancel or to affirm the agreement, but to the impression that his conduct, and particularly his delay in informing the other party of his decision, creates in the latter's mind, and whether, if the circumstances are such that the other party may fairly infer an election to affirm the agreement, the innocent party will then be held to have waived the right to cancel, whatever his actual election might have been.The decision in the Durban and Coast Local Division in Mahabeer v Sharma NO and Another 1983 (4) SA 421 confirmed.

26. SWART v VOSLOO

Where a landlord adopts a method of communication other than that provided for in the agreement of lease he does so at the risk of having to prove actual delivery of the communication to the lessee where the receipt thereof is disputed by him.The termination of a contract has important consequences upon the reciprocal rights and duties of the parties thereto, and this would seem to provide further justification for holding that if a party decides to exercise a right to declare a contract cancelled he should intimate his election to the defaulting party effectively to terminate the contract, unless that contract itself provides, either expressly or by necessary implication, that termination may be effected in some manner other than communication to the defaulting party.

A written lease in respect of premises on which a liquor trade was being conducted provided that the lessee should have an option to purchase the premises.The lessee exercised the option but, in an action claiming transfer the lessor pleaded that he had terminated the lease prior to the exercise of the option.For the defence he relied upon a provision in the lease, the material portion of which read as follows: '...in the event of the lessee or any of his servants or employees being prosecuted for any offence under the Liquor Law ...the lessor shall be entitled, notwithstanding any previous or existing waiver of any right of re-entry, to declare this lease cancelled and terminated forthwith'.It appeared that an employee of the lessee had been prosecuted for a contravention of the Liquor Law.The trial Court had accepted the lessee's evidence that he had only become aware of the lessor's letter terminating the lease after he had exercised the option.This letter had been received by an employee of the lessee.The Court accordingly entered judgment in the lessee's favour.In an appeal,The Court held, that by the use of the word 'declare' the parties connoted an activity which concerned not only the person making the declaration but some other person or persons as well.The Court held, further, that the phrase 'to declare this lease ...terminated forthwith', meant that if the lessor decided to avail himself of the right of terminating the lease, his election to do so was to be intimated or made known to the lessee.The delivery to the employee was not delivery to the lessee.The decision in the Transvaal Provincial Division in Vosloo v Swart, confirmed.

27. PUTCO LTD v TV & RADIO GUARANTEE CO (PTY) LTD AND OTHER RELATED CASES

When parties bind themselves to an agreement which requires them to work closely together and to have mutual trust and confidence in each other (the agreement in the present case being an example thereof), it is reasonable to infer that they did not intend to bind themselves indefinitely, but rather contemplated termination by either party on reasonable notice.Where an agreement is silent as to its duration, it is terminable on reasonable notice in the absence of a conclusion that it was intended to continue indefinitely.The inclusion in the agreement of specific grounds for termination (in the present case the agreement listed three specific grounds for termination) does not exclude termination by reasonable notice.The logical consequence of an argument that only the specific grounds for cancellation of the agreement exist would be that, provided those grounds for cancellation do not arise, the agreement would continue indefinitely.

This would not be a proper construction to place on the agreement as it ignores the intention of the parties when entering into the agreement, and such intention is paramount.A contract which is a temporary interim contract operating until a detailed agreement is concluded by the parties as a result of negotiations is not necessarily ipso facto terminated on the failure of such negotiations.It is a question of what the parties impliedly must have intended should happen in the event of their negotiations not reaching fruition.The Court held that a contract granting to the respondent the "sole and exclusive advertising rights with regard to" the appellant's buses, the contract being a temporary interim contract operating until a detailed agreement was concluded by the parties when their negotiations were concluded, was not terminated by the failure of the negotiations achieving the conclusion of the detailed agreement.The Court held further, in the circumstances, that the contract was terminable on reasonable notice by one party to the other.Quaere: whether, in determining what is a reasonable period of notice of termination of a contract, regard must be had to the actual circumstances existing at the time of notice or those existing at the time of contract.Whatever the position may be regarding the circumstances to be considered in determining what is the reasonable period of notice, a reasonable notice must allow the person to whom such notice is given sufficient time in which reasonably to regulate his own affairs.The Court held, in regard to a notice of termination of the agreement in question (being one conferring on the respondent the sole and exclusive advertising rights with regard to the appellant's buses), that 28 days' notice was insufficient and therefore not reasonable.In coming to this conclusion the Court took into account that the termination of the agreement would have brough to an end the promotional and sales side of advertising and perhaps even have reduced the respondent's management and maintenance needs.The respondent would either have had to find new avenues in which to employ those persons whose duties would be affected by the termination of the contract or dispense with their services.In such circumstances, The Court held that 28 days was not a sufficient period of notice.The Court held however that a period of six months' notice did constitute reasonable notice where the notice terminating the contract did not preclude the respondent from fulfilling its obligations towards the advertisers it had contracted with before the termination.The Court held, in regard to the nature of a contract granting "sole and exclusive advertising rights" to one party "with regard to" the other party's buses, that it was clearly not a contract of agency but that, broadly speaking it could be classified as an innominate contract which confers a licence or privilege.In proceedings for contempt of Court, once a failure to comply with an order of Court has been established, wilfulness will normally be inferred, and the onus will rest upon the person who failed to comply with such order to rebut the inference of wilfulness on a balance of probabilities.This can be done by such person establishing that he did not intentionally disobey the Court's order.The Court held that where a party had failed to transmit certain information to the other party in litigation between them in terms of an order of Court due to inadvertence, the inference of wilfulness had been rebutted and no contempt of Court had been committed.

The decision in the Witwatersrand Local Division in Putco Ltd v TV & Radio Guarantee Co (Pty) Ltd 1984 (1) SA 443 reversed.

28. BAKER v PROBERT

A purchaser's right to claim repayment of the purchase price pursuant to the valid cancellation of a contract of sale obviously exists also where payment of the purchase price was made, not to the seller in person, but to his duly authorised agent, since payment to an agent is equivalent in law to payment to the principal.The purchaser's right to claim repayment from the seller in this situation is not affected by the failure or inability of the agent to pay over the purchase price to the seller.The purchaser's claim is not a condictio; it is a distinct contractual remedy.In its usual contexts - ie holding a res litigiosa pending the outcome of litigation between rival claimants or holding money which is the subject of a wager - it is of the essence of stakeholding that at its inception it is uncertain which of the two parties involved will ultimately become entitled to receive what the stakeholder is holding and it cannot be said that the stakeholder, when he receives the money or thing, is acting as the agent specifically of one or the other of the two parties.Whether one can speak of stakeholding where the holder does act specifically as the agent of one of the two parties is perhaps more a question of semantics than principle: if the word "stakeholder" is used in its narrow (and, it would appear, without so deciding, its preferable) sense as being confined to a third party who receives and holds something not as the agent of either of the two parties having an interest therein, it would be wrong to categorise the holder as a stakeholder; if, on the other hand, the word is used in a loose sense, there would be no objection to calling the holder a stakeholder.Pursuant to the sale of a shareblock in a company, the purchaser (respondent herein) undertook to effect payment of the purchase price to an estate agency which had negotiated the sale on behalf of the seller (appellant).The contract provided (in clause 3 thereof) that such payment was "to be made to the agents to be held by them in trust for payment to the sellers on the effective date provided that the sellers have complied with the provisions of para 5 hereof" - para 5 providing that "the seller shall forthwith deliver to the agents, to be held in trust by them...the share certificates in respect of the shareblock, together with a duly completed share transfer form..." The purchaser duly paid the purchase price to the agency, but the seller, despite demand, failed to deliver the share certificates.The purchaser ultimately validly cancelled the contract on the ground of the defendant's breach thereof.Shortly thereafter the estate agency was liquidated.The purchaser proved his claim, but received no dividend.In a Local Division the purchaser successfully claimed repayment of the purchase price from the seller.In an appeal, the main issue was whether or not the estate agency was the agent of the seller for receiving payment of the purchase price.It was argued on behalf of the seller that the payment was a species of depositum sequestrarium and that the agency, being a stakeholder, was for that reason not the agent of the seller.It was further contended that, inasmuch as the agency was not the agent of the seller,

payment to the agency had not discharged the purchaser's obligation to the seller, so that no claim lay against the latter for recovery of the purchase price.The Court held, that it was clearly implicit in clause 3 of the contract that the agency was to act as the seller's agent for the purpose of receiving payment and that payment to the agency would operate as a complete discharge of the purchaser's obligation under the contract.The Court held, accordingly, with reference to the principles set out in  the first paragraph above, that the purchaser was prima facie entitled to claim repayment from the seller where the contract had been validly cancelled.The Court held, further, with reference to the principles set out in the second paragraph above, that, if the agency could appropriately be called a stakeholder, it could only have been a stakeholder in the loose sense of the word which did not preclude the agency acting as the agent of the seller for the purpose of receiving payment.The Court held, accordingly, that the purchaser was indeed entitled to repayment of the purchase price.The decision of the Durban and Coast Local Division in Probert v Baker1983 (3) SA 229 (D) confirmed, but for different reasons.

29. PROBERT v BAKER

The plaintiff had purchased a shareblock from the defendant for R17 500.In terms of their agreement, the purchase price and the relevant share certificates were to be deposited in trust with a firm of estate agents who, on the effective date of the sale, would release the monies and share certificates to the defendant and plaintiff respectively.The plaintiff duly deposited the sum of R17 500 with the estate agents but, after a period of 15 months had elapsed and the defendant had failed to deposit the share certificates, she cancelled the sale.The estate agents were liquidated eight days thereafter.Although the plaintiff had proved a claim against them, she received no dividend.She thereafter instituted action against the defendant, alleging the agreement, her payment to the estate agents, the defendant's breach of contract, her cancellation thereof, and concluded that, in the premises, the defendant was liable to her for R17 500 together with interest thereon at the rate of 11% per annum calculated from the date of cancellation.The defendant, while not denying her allegations, attacked her conclusion.In a trial, The Court held, that the plaintiff's claim had been formulated broadly enough to embrace a claim for damages for breach of contract; the defendant had himself to blame for his failure to confine the plaintiff to a specific cause of action by means of an appropriate request for further particulars.The Court held, further, that while damages for breach of contract were usually computed on the basis of positive interesse, there was nothing in principle to preclude a claim computed on the basis of negative interesse, provided that the contract had been duly cancelled by the aggrieved party since, upon cancellation, the parties are liable, insofar as it may be feasible to enforce it, to effect restitution of what each has received.The Court held, further, the defendant having formally admitted that the plaintiff had sought to excuss the estate agents to no avail and the plaintiff having duly completed proof of every element of her claim for damages for negative interest, that the plaintiff was entitled to be awarded damages in the sum of R17 500.

The Court held, further, that, whichever test was applied, the claim, despite being one for damages, was a claim for a liquidated amount and, accordingly, that the plaintiff was entitled to interest thereon at the rate of 11% per annum calculated from the date of cancellation of the contract.The question whether the purchaser in a contract of sale who has paid the purchase price to a stakeholder has an action against the seller for recovery of the purchase price paid after cancellation of the contract by reason of the seller's breach thereof and after the stakeholder has been sequestrated or liquidated and no dividend in respect of the purchase price has been paid to the purchaser, discussed.

30. MAINLINE CARRIERS (PTY) LTD v JAAD INVESTMENTS CC AND ANOTHER

In terms of an agreement between LT Ltd and the defendants, LT Ltd had purchased all the shares in the plaintiff and in a second company.The agreement incorporated a warranty by the first defendant that the profit forecast attached to the agreement had been prepared in good faith by the second defendant, taking into account all relevant factors of which he was aware and stating that the profit forecast contained no material inaccuracies.It was alleged that the warranty had been breached in that not only had the shares in the second company turned out to be worthless, but the business owned and operated by the plaintiff had at all times since the conclusion of the agreement operated at a substantial loss and would have collapsed but for the financial support given by LT Ltd As cessionary of LT Ltd's claim, the plaintiff sought to recover as damages from the defendants the purchase price of the shares; restraint payments made to certain managers; legal and professional costs incurred in consequence of LT Ltd's concluding the agreement; and permanently irrecoverable moneys paid to support the businesses owned and operated by the plaintiff.The defendants excepted to the plaintiff's claim on the grounds that a party to a contract who complained of a breach by the other party could not claim damages which would have the effect of placing it in the position it would have occupied if the contract had not been negotiated and concluded (which damages the defendants referred to as 'restitutionary damages, representing its negative interesse') unless the contract had been cancelled; and, in the alternative, that a claim for the aggrieved party's negative interesse as a result of a breach of contract was not sustainable.These arguments were based on the decisions in Probert v Baker1983 (3) SA 229 (D) and Hamer v Wall1993 (1) SA 235 (T) respectively.In Probert's case it was held that only on cancellation could a plaintiff claim 'on the basis of negative interesse'; whereas in Hamer's case it was held that the Probert decision was wrong and that the true doctrine was that a party to a contract who complained of a breach of contract by another party thereto might only claim his positive interesse.The defendants submitted that, even if the Probert decision were correct, this could not avail the plaintiff because it had not been alleged that the contract had been cancelled.The Court held, that both positions adopted by the defendants rested on a priori arguments which, as a survey of civil and common-law systems showed, were misleading as none of those systems took the Hamer position and in both civil and common law systems claims for negative interest were allowed even though the aggrieved party had not put an end to the contract.

The Court held, further, that it could not be found that either a priori position had been adopted in South African law, in isolation from both systems from which elements of its law of damages had been drawn, unless such conclusion were supported by a statute in

point, or a binding decision of a Court of higher jurisdiction, or the communis opinio doctorum or, in their absence, by compelling juridical analysis.

The Court held, further, that no such support could be found either in statute or in the writings of the 'old authorities'.Nor could such support be found, upon proper analysis, in the dictum in Victoria Falls & Transvaal Power Co Ltd v Consolidated Langlaagte Mines Ltd 1915 AD 1 at 22; while the dictum in Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd1985 (1) SA 475 (A) at 506C to the effect that positive interest could not be recovered in a delictual action based on the lex Aquilia was not authority for the converse proposition that a contractual action for damages could not be used to protect the plaintiff's negative interest under the contract.The Court held, further, that, while on the approach adopted in the Australian Courts a plaintiff was regarded as suing for his expectation interest (or positive interest) even when seeking to recover lost expenditure, on the basis that the law assumed that if the contract had been performed the plaintiff would at least have recovered such expenditure as had reasonably been incurred in reliance on the defendant's performance, whereas in American, English and Canadian law a plaintiff suing for expenditure rendered futile because of the defendant's breach was regarded as suing to protect his reliance (negative) interest, subject to the rule that expectation interest set the limit of recovery, nothing much turned upon the different approaches from a practical point of view because the result was generally the same.

The Court held, further, accepting as correct the analysis that the purposes pursued in awarding contractual damages were to protect the claimant's (a) restitutional interest; (b) reliance (or negative) interest; and (c) expectation (or positive) interest, that there was room in South African law for protection by contractual damages of a plaintiff's reliance interest in the event of breach, subject to the proviso that reliance interest was limited by expectation interest.

The Court held, further, that, despite considerable overlap between them, restitution interest (the object of which was to prevent the unjust enrichment of the defendant) and reliance interest remained distinct concepts.Thus, while rescission of contract might be required where damages were sought to protect a plaintiff's restitutional interest, there was no sound policy-based reason for requiring rescission where reliance loss, as such, was claimed.

The Court held, further, that there were two bases for finding that the defendants' argument  based on the Hamer decision had to fail.First, on the basis of the Australian approach, the plaintiff's claim was only coincidentally for its negative interesse; it was mainly for its positive interesse: by warranting its profit forecast, an undertaking had been given to make it good, ie if it was breached, to put LT Ltd financially in the same position as it would have been in if the forecast had been prepared in good faith, with no material inaccuracies or omissions and, if that had happened, there would have been no contract and therefore no loss.Second, on the basis of the Anglo-American approach, LT Ltd, and the plaintiff as its cessionary, had the right to choose to institute action for contractual damages to protect its reliance or negative interest, subject to the rule that the expectation interest would set the limit for recovery.Exception accordingly dismissed.

31. HAMER v Wall The plaintiff (appellant) instituted action in a magistrate's court against the defendant (respondent) for damages arising from the defendant's breach of contract.The plaintiff and defendant had agreed to enter into a partnership agreement and on the strength thereof the plaintiff had resigned from his job.The partnership agreement was never concluded because of the defendant's breach of contract as a result of which he spent a month out of work for which he claimed from the defendant the amount of money he would have earned for that month by way of salary.The magistrate ordered absolution from the instance.On appeal, the Court (per Goldstein J, Eloff JP concurring; J Strydomdissenting) held that the plaintiff's claim for damages on that basis was a claim for his negative interesse and that he was not permitted to claim damages on that basis.The Court further held that a plaintiff could not elect to pursue either his negative interesse or his positive interesse.Appeal dismissed.

32. HENDRICKS v PRESIDENT INSURANCE CO LTD In the assessment of damages, it is a long established principle of our law that where it is clear that damages have been suffered but that the quantum of those damages is not conducive to precise calculation or even certain reliable estimation, the wrongdoer will not be relieved of the necessity to pay by reason of the difficulties in assessing the quantum, the principle having as its ratio the policy that the wrongdoer should not escape liability merely because the damages he caused cannot be quantified readily or accurately.The question which then arises is whether or not this principle is to be applied where the issue is not the quantum of damages but rather whether or not damages have actually resulted from the action of the wrongdoer; that is, does the ratio for the principle support its extension to a situation where it is sought to show that damages have actually been suffered rather than to establish the quantum of such damages? Insofar as the ratio for the principle is to prevent a wrongdoer who has caused damage from being relieved of his liability, it does not follow that the principle is to be applied where it is sought to establish whether or not the wrongdoer has caused damage which, when quantified, will be recoverable.

33. HOLMDENE BRICKWORKS (PTY) LTD v ROBERTS CONSTRUCTION CO LTD

A merchant who sells goods of his own manufacture or goods in relation to which he publicly professes to have attributes of skill and expert knowledge is liable to the purchaser for consequential damages caused to the latter by reason of any latent defect in the goods.Ignorance of the defect does not excuse the seller.Once it is established that he falls into one of the above-mentioned categories, the law irrebuttably attaches this liability to him, unless he has expressly or impliedly contracted out of it.The liability is additional to, and different from, the liability to redhibitorian relief which is incurred by any seller of goods found to contain a latent defect.

Broadly speaking, a defect may be described as an abnormal quality or attribute which destroys or substantially impairs the utility or effectiveness of the res vendita for the purpose for which it has been sold or for which it is commonly used.Such a defect is latent when it is one which is not visible or discoverable upon an inspection of the res vendita.Quaere : Whether to be latent the defect must be not "easily visible" or whether the test is rather that it should not be reasonably discoverable or discernible by the ordinary purchaser.Quaere : What effect, if any, is produced by the fact that the purchaser is himself an expert in regard to the res vendita or employs an expert to examine the goods.Quaere : Whether the liability of the manufacturer/seller for consequential damages arising from a latent defect in the res vendita is founded upon breach of contract or delictual.Respondent, which carried on business as building and engineering contractors, had contracted to purchase bricks from the appellant, which carried on business as the manufacturers and sellers of bricks in certain walls of a building being built by the respondent with bricks supplied by the appellant, respondent contended that a substantial portion of the bricks used were found to be defective, necessitating the demolition of such walls.Respondent had purchased other bricks from another brick company.The appellant was sued for consequential damages arising from the breach of contract.On 2 July 1975 judgment was granted in the respondent's favour.No interest had been claimed and naturally none was awarded in an appeal by the appellant the respondent applied, by way of an amendment, for (1) interest at six per cent from 2 July 1975 and (2) interest at 11 per cent from date of judgment in the Appeal Court in terms of Act 55 of 1975.Only the first application was opposed.The Court held, on the evidence, that appellant had sold respondent bricks containing a latent defect.The Court held, further, that the demolition of the walls was a natural and foreseeable consequence of the seller's default.The Court held, further, that the respondent had acted reasonably in demolishing the brickwork.The Court held, further, that to allow now the two applications for the payment of interest would in effect be varying the order of the Court to the detriment of the appellant.This the Court could not do in the absence of a cross-appeal.The Court held, as to the second application, that, as the Act came into operation on 16 July 1967, after the judgment in the Court a quo, section 3 (2) of the Act did not apply.Accordingly the application should be refused.The decision in the Transvaal Provincial Division in Roberts Construction Co.Ltd v Holmdene Brickworks (Pty.) Ltd confirmed.

34. SHATZ INVESTMENTS (PTY) LTD v KALOVYRNAS Where, in terms of a lease, the premises are expressly let for a profit-making business, loss of profits may, on breach of the lease by the lessor, be recoverable in appropriate circumstances.Such damages are ordinarily regarded, not as general damages, but as special damages.A fortiori a claim for loss of goodwill on disposal of the business is a claim for special damages.

It is not a loss that generally flows from a breach of the lease of business premises.Consequently unless the plaintiff proves that the parties actually or presumptively contemplated that a loss of that kind would probably ensue on such a breach, such damages are too remote and not recoverable.The decisive time for ascertaining the parties' contemplation that such a loss would ensue on breach of the contract is when they contract and not when the contract is breached.Not only must there have been common knowledge that such a loss would ensue on breach of the contract, but the parties must have entered into the contract 'on the basis' of such knowledge.Quaere: Whether or not the time is fast approaching when, in an appropriate case, the correctness of the principles relating to the award of special damages for breach of contract, as set out in Laver & Co.Ltd v.Jungheinrich, supra, should be reconsidered.In an appeal by a lessor against a decision in a Local Division awarding the respondent lessee damages for loss of goodwill on his disposal of the business for which the premises had been leased resulting from the lessor's breach of the lease, the lessee cross-appealed as to the quantum of the award and also as to costs.The lessee had sought an award of costs on the attorney and client scale on the grounds, inter alia, that the lessor's breach of the lease was wilful, and that there had been an inordinately long cross-examination by the lessor on one of the issues in the case.The Court held, as to the appeal, that the lessee had discharged the otius on him of proving such damages even on the application of the more rigorous test to be applied in accordance with the above-stated principles in regard to proof of special damages.The Court held, as to the cross-appeal on quantum, that the lessee had proved that he was entitled to an award in a larger amount.The Court held, as to the cross-appeal on costs, that notice that attorney and client costs were going to be claimed on the ground that the breach of the lease was wilful should have been given to the defendant at some stage before it closed its case so that it could have ventilated that issue by evidence if it had so chosen.The Court held, further, although the cross-examination was inordinately long and appeared to have been irrelevant, that usually a wide latitude should be afforded a defendant in presenting his defence, especially when the defendant is confronted with a substantial claim for damages.The Court held, accordingly, that (1) the appeal should be dismissed with costs; (2) the cross-appeal succeeded to the extent that the amount of damages awarded by the Court a quo was increased; (3) the cross-appeal on the costs awarded by the Court a quo should be dismissed, and (4) the costs of the cross-appeal were to be paid by the appellant (defendant in the Court a quo ).The decision in the Witwatersrand Local Division in Kalovyrnas v.Shatz Investments (Pty.) Ltd, confirmed but the order as to damages varied.

35. EMADYL INDUSTRIES CC t/a RAYDON INDUSTRIES (PTY) LTD v FORMEX ENGINEERING

The plaintiff sought damages from the defendant for breach (by repudiation) of a contract for the supply of manufactured automotive components to the defendant.The plaintiff contended that, since at the date of repudiation, it had in stock (1) a

number of completed components, as well as (2) raw material acquired in anticipation of future production under the repudiated agreement, it was entitled to claim both (1) the contract price for the completed components, and (2) the expenditure wasted in acquiring the raw material.The issue was whether it was competent for the plaintiff to frame a claim for damages for breach of contract in this manner.The Court held: The claim as formulated was unusual in that it was not one for lost profits but lost expenditure, ie it sought to compensate the plaintiff for his loss instead of putting him into the position he would have been had the contract been properly honoured.Although there were opposing views as to whether or not a plaintiff could elect to claim either lost expenditure (reliance or negative interest) or lost profits (expectation or positive interest), or was limited to a claim for lost profits, the approach adopted in Mainline Carriers (Pty) Ltd v Jaad Investments CC 1998 (2) SA 468 (C) had much to recommend it, namely that, subject to the rule that expectation interest set the limit of recovery, nothing much turned upon the different approaches from a practical point of view.It was accordingly open, in the circumstances, for the plaintiff to approach its claim for damages on the basis which it did, subject to the rule that positive interest set the limit of recovery, ie that the plaintiff could recover no greater damages than would have been recoverable had the contract been honoured.

36. INTERNATIONAL SHIPPING CO (PTY) LTD v BENTLEY The appellant, a company carrying on the business of financiers and shippers, agreed to make certain financial facilities available to the DD Group of companies early in 1976.The respondent was appointed auditor to the DD Group in November 1977.In March 1979 the respondent issued reports in respect of the financial statements of each of the companies comprising the DD Group, as well as the Group financial statements, for the year ended 20 December 1978.In each of these reports, which were not qualified in any way, the respondent stated that he had examined the financial statements in question and had complied with the requirements of s 300 of the Companies Act 61 of 1973, that in his opinion the statements fairly represented the financial position of the company concerned as at 20 December 1978 and the results of its operations for the period then ended, in the manner required by the Companies Act.The appellant continued to provide these financial facilities until the liquidation of the companies comprising the DD Group in April 1981.At the time of such liquidation the total indebtedness of the DD Group to the appellant amounted to R977 318, of which only the sum of R593 826 was recovered by the appellant who thus sustained a loss in the amount of R383 492.In April 1982 the appellant instituted an action for damages against the respondent in a Local Division, alleging that the aforementioned financial statements were materially false and misleading in a number of respects; that in so reporting the respondent acted fraudulently or, alternatively, negligently towards the appellant, who had relied thereon in reviewing and deciding to maintain and increase the facilities accorded to the DD Group; that had the 1978 financial statements fairly presented the financial position of the DD Group and its constituent companies, the appellant would have terminated the facilities and have required the Group to make good its indebtedness to the appellant; and that the loss sustained by the appellant constituted damage which the respondent was accordingly liable to compensate the appellant for.

The action was dismissed by the Court a quo and the appellant thereafter brought the instant appeal in which the Court held (a) that the financial statements were, to some extent, false and misleading; (b) that there was no reason for interfering with the Court a quo's finding that fraud had not been established but that negligence had been established in regard to some aspects of the financial statements; and (c) that unlawfulness had been established in that it could not be said that the respondent had properly complied with his statutory duties in terms of s 300 of the Companies Act.The only remaining issue was that of causation.The Court held, that, as far as factual causation was concerned, the respondent's negligent report on the 1978 financial statements unquestionably constituted a causa sine qua non of the appellant's loss since a proper, non-negligent, performance by the respondent of his duties as auditor would have obviated the appellant's ultimate loss.The Court held, further, with regard to legal causation, that there were a number of factors which tended to separate cause and effect in the instant case, viz the time factor (two years had elapsed between the respondent's reporting and the loss); the decision by the appellant to provide a support programme for the Group at a stage when it already knew that the Group's financial situation was fairly bleak; the fact that the appellant allowed the DD Group's indebtedness to escalate, the changed relationship between the parties as a result of the implementation of the support programme - appellant and the DD Group ceased dealing at arm's length with each other and the appellant became intimately involved in the administration (or lack thereof) of the Group; the fraud committed by the managing director of the DD Group which played an important part in causing the financial loss which the appellant ultimately incurred; the fact that to some extent the appellant did not rely on the 1978 financial statements prepared by the respondent; and, lastly, the foreseeability of the support programme - the support programme amounted to uninhibited lending to the DD Group without added security, which was the real cause of the appellant's loss and such a situation was hardly foreseeable in March 1979.The Court held, further, having regard to the above-mentioned factors, that the ultimate loss suffered by the appellant was too remote for legal liability on respondent's part to arise.Appeal dismissed.The decision in the Witwatersrand Local Division in International Shipping Co (Pty) Ltd v Bentley confirmed.

37. SWEET v RAGERGUHARA, NO, AND OTHERS Where cancellation of an agreement is claimed in motion proceedings the applicant should unequivocally state in his founding affidavit that his cancellation is based on a material breach of the agreement and he should thereafter set out fully the facts on which he relies for his assertion.Applicant had applied for an order declaring an agreement of sale of immovable property to have been lawfully cancelled.The purported cancellation was on the ground that the respondents had failed to give applicant vacant possession on the date stipulated in the agreement.The notice of rescission which had been given by way of a letter, called upon the respondents to ensure that the applicant would be given vacant possession within 30 days from the date of the letter.The Court held, that by not giving vacant possession there had been a breach of the agreement.

The Court held, further, that the question whether the breach was material had to be decided by viva voce evidence.The Court held, further, that a notice of rescission was of no legal consequences unless it related to the failure to perform a "vital" or "important" term of the agreement timeously.The Court held, further, that the notice of rescission was of no legal consequence when given in respect of defective performance.The Court held, further, that ex facie the letter there had been no valid notice of rescission.

38. NEL v CLOETE 19 Where a creditor envisages possible cancellation as a result of mora, he can, in the notice placing the debtor in mora, also state that, on failure to perform within the period fixed, he reserves the right to withdraw from the contract.The question on whom the onus rests to prove that the period fixed was reasonable or unreasonable, discussed.The appellant had, in terms of a written agreement which had been concluded on 3rd October, 1968, purchased a house from the respondent and paid an amount of R1 750 as a deposit.The balance of the purchase price was to be paid by means of a building society bond.Transfer dragged on because the title deeds could not be found.The respondent's attorney had eventually decided to apply for a copy.Before this application was ready, ie on 13th June, 1969, the appellant's attorney sent a letter of demand to the respondent demanding that transfer should be effected within two months, ie on 12th August, 1969, otherwise the appellant would resile from the contract and demand repayment of the deposit and damages.The respondent replied that the title deeds had not yet been found.On 12th August transfer had not yet been effected.When the appellant learnt on 22nd August that the building society had decided to withdraw the loan because of the delay, he wrote to the respondent on 26th August that the sale must be regarded as cancelled.An action for repayment of the deposit, damages, etc., was dismissed by a Provincial Division on the ground that the period of two months was unreasonable.In an appeal, The Court held, that the period of two months allowed in the demand for performance was reasonable, if delay due to the fact that respondent's deed of transfer could not be found was not taken into account - the more so if the considerable period which elapsed before the date of demand was also taken into account.The Court held, further, that the alleged impossibility of complying within the reasonable time fixed by the demand was due to respondent's own fault.The Court held, therefore, that respondent had been in mora on the termination of the period of two months, and was still in mora when appellant exercised his right to withdraw on 26th August, 1969.The decision in the Transvaal Provincial Division in Nel v Cloete, 1971 (2) SA 460, reversed.

39. ADMINISTRATOR, NATAL v EDOUARD

The respondent, in his capacity as administrator of the joint estate of himself and his wife, instituted an action for damages against the appellant in a Local Division, which damages arose out of the failure, in breach of a contract concluded between the respondent's wife, duly assisted by the respondent, and a provincial hospital, to perform a tubal ligation on the respondent's wife in order to render her sterile.The operation was to be performed during the course of a caesarean section for the birth of the couple's third child, but the tubal ligation was in fact not performed.A year later the respondent's wife gave birth to another child and the respondent, in an action for damages for breach of contract, claimed damages for the cost of supporting and maintaining the child born as result of the failure to perform the sterilisation operation, and general damages for the discomfort, pain and suffering and loss of amenities of life suffered by his wife.The Court a quo upheld the claim for maintenance and support of the child but held that a breach of contract did not give rise to a claim for non-patrimonial damages.In an appeal by the appellant against the award of an amount of R22 500 on the first issue and a cross-appeal by the respondent against the disallowance of general damages, it was contended for the appellant that to allow a pregnancy claim such as the instant one would be to transfer from the parents to a doctor or hospital the legal obligation of supporting a child, and that this ran counter to public policy which demanded that there be no interference with the sanctity accorded by law to the relationship between parent and child.The Court held, that the amount awarded to the respondent in the Court a quo in no way relieved the respondent from the obligation to support the child in question but that at most it enabled the respondent to fulfil that obligation, so that there could be no question that the obligation had in law been transferred from the respondent to the appellant.The Court held, therefore, that the respondent's pregnancy claim was rightly allowed by the Court a quo, but that this conclusion only pertained to a case where, as in casu, a sterilisation procedure was performed for socio-economic reasons - different considerations could apply where sterilisation was sought for some other reason.The Court held, further, as far as the cross-appeal was concerned, that our Courts have in later years consistently indicated that only patrimonial loss could be recovered in contract.The Court held, further, that there was no sufficient reason of policy or convenience for importing into our law an extension of liability for breach of contract so that intangible loss might be recovered ex contractu - it would, on the contrary, lead to incongruous results.The Court held, accordingly, that both the appeal and cross-appeal had to be dismissed.The decision in the Durban and Coast Local Division in Edouard v Administrator, Natal 1989 (2) SA 368 confirmed.

40. ALFRED McALPINE & SON (PTY) LTD v TRANSVAAL PROVINCIAL ADMINISTRATION

A contract to do a specified work for an agreed price can from its very beginning be so altered by the owner and carried out by the contractor that it can be said that for the original contract there was tacitly substituted a new agreement in terms whereof the contractor was entitled to reasonable remuneration for the work.It will depend on the facts whether that has occurred.Also during the execution of a contract to do work for an agreed price the contractor can receive, and also accept, instructions to do work which cannot really be regarded as part

of the original contract, and the contractor is entitled to reasonable remuneration for that work on the ground of a separate tacit agreement.It will also in this case depend on the facts whether such a separate agreement came into existence.Appellant was the plaintiff and respondent the defendant in the Court a quo.The parties entered into a contract in terms whereof plaintiff had undertaken to build a portion of a national road.Certain declaratory orders were applied for on the plaintiff's behalf.During the execution of the contract the contractor had received instructions to introduce an exceptionally large number of alterations which in certain cases had caused disruption.On plaintiff's behalf it was alleged that, although each alteration had fallen within the scope of the contract, the cumulative effect of all the alterations was of such a nature that the original contract had lapsed and a new contract had arisen impliedly through the conduct of the parties, in terms whereof the plaintiff was entitled to reasonable remuneration for all the work done, ie from the commencement of the execution of the contract.The Court a quo had held that the variations had been envisaged in the original contract.In an appeal,The Court held, as the plaintiff right up to the completion of the contract had still relied on the original contract, that it could not possibly be said that the original contract in its entirety had been regarded by the parties as having lapsed and that a new contract had been entered into in terms whereof defendant was entitled to reasonable remuneration for all the work done.The Court held, further, that there was a lack of evidence that what the plaintiff had built was not substantially the road which the contract envisaged.The Court held, further, as to an alternative claim for an order declaring that a certain implied term had to be assumed in terms whereof plaintiff was entitled to compensation for the disruption which had occurred because the engineer had not introduced his variations "at reasonable times", that "at a reasonable time" was not the same as "within a reasonable time" and that such claim had rightly been rejected by the Court a quo.The Court held, further, that in the absence of a properly defined wording of an implied term which, notwithstanding the express provisions of the contract, had to be acknowledged, it was not the duty of the Appeal Court at that stage to work out what wording such a term must have in order to satisfy the plaintiff as well as comply with the stated requirements before the term could be acknowledged.The decision in the Transvaal Provincial Division in Alfred McAlpine & Son (Pty.)Ltd v Transvaal Provincial Administration, confirmed.

41. FALCH v WESSELS The respondent had successfully instituted an action for delivery of a stove against the appellant in a magistrate's court.It was common cause that the parties had concluded a written agreement of sale in terms whereof respondent had purchased a certain property with a dwelling thereon from the appellant.It was also common cause that the stove had stood in the kitchen of the said dwelling at all relevant times before and at the time of the conclusion of the agreement, and that it had been connected to the domestic electrical system by means of a cable.In an appeal, the Court was, inter alia, faced with the question whether, in the context of

the facts, a term should be implied ex lege that the stove had been included in the subject-matter of the sale.The Court held, that a stove, in the light of current notions, is intended to be of permanent service to a house (or flat) and is essential for the effective use and enjoyment thereof.The Court held, accordingly, in the light of the facts and the further consideration that appellant could have excluded the stove from the sale but failed to do so, that the stove had to be regarded as part of the subject-matter of the sale.Appeal dismissed.

42. GOLDEN CAPE FRUITS (PTY) LTD v FOTOPLATE (PTY) LTD Putting the position at its lowest, the evidence required to establish a trade usage must be clear, convincing and consistent.It must, moreover, amount to something more than mere opinion: instances of the usage having been acted upon should be provided in order to establish the fact of the existence of the usage.No rule can be laid down as to the number of witnesses required.This depends very much upon the nature of the usage in question, the character and quality of the witnesses and the extent to which their evidence is placed in issue by other evidence.In the nature of things the Court would not readily act upon the evidence of a single witness, even if uncontradicted: a fortiori if there is a conflict in the evidence.In 1971 appellant decided to have a new brochure printed by photolithographic process.Appellant ordered direct from a specialist photo lithographer, the respondent, certain photolithographic plates which appellant then passed on to the printer who printed the required number of copies.Owing to an error in the plates the copies could not be used and appellant had claimed from respondent the cost of the printing of them either on the basis of respondent's breach of contract or on the ground of respondent's negligence.Respondent's defence was that the contract was subject to a trade usage which in the circumstances absolved it from liability, this alleged usage being to the effect that respondent would exhibit to appellant 'rough proofs' of the plates (positives) for approval, amendment or rejection and that, if the rough proofs were approved by appellant, as they had been, then respondent's obligations under the agreement would be fulfilled by completing and delivering the positives in accordance with the proofs.The evidence disclosed that the mistake would not be obvious even to an expert, that checking by an expert would take considerable time, and that neither the respondent's employees nor those of the printer had detected the error until after the copies had been printed.A magistrate's court having granted absolution from the instance, in an appeal, The Court held, that respondent had failed to discharge the onus of establishing a trade usage which absolved it from liability for breach of contract in that it had failed to establish (1) that a trade usage in regard to the consequences of the customer's approval of proofs existed; (2) that, if there was such usage, it applied to photolithographic positives and related, without qualification, to all errors, including those occurring in aspects not clearly conveyed to the customer; and (3) that, if the application to photolithographic positives were accepted subject to qualification, the error in the present case was in regard to a matter clearly conveyed to the customer.

The Court held, therefore, that judgment should have been granted for the appellant, in the amount claimed, with costs.

43. WILKINS NO v VOGES A company, S (Pty) Ltd, in February 1988 purchased from the respondent certain land on which it intended to develop a residential township.After the conclusion of the sale and the payment of a portion of the purchase price, S (Pty) Ltd discovered that a plan existed for the construction of a provincial road across the land it had purchased, which, if implemented, would impede the development of the contemplated township.S (Pty) Ltd declined to pay the balance of the purchase price, upon which the respondent as seller instituted action in a Local Division against S (Pty) Ltd for the payment of the said balance.At the same time S (Pty) Ltd in the same Court launched motion proceedings against the respondent for an order confirming its cancellation of the sale and for repayment of the sum already paid.The Court in the application proceedings granted an order referring the matter to trial, with the direction that S (Pty) Ltd was to seek its relief by counterclaim to the respondent's action - a consolidation, in effect, of the two proceedings.S (Pty) Ltd in its plea relied, in the main, on certain tacit warranties which it alleged had been breached by the respondent, with the consequence that S (Pty) Ltd had cancelled the agreement and suffered the damages which it detailed in its counterclaim.The respondent filed a replication to the plea and a plea to the counterclaim, denying the existence of the tacit terms, their breaches, the validity of the cancellation and any liability for losses allegedly suffered by the defendant.S (Pty) Ltd was liquidated during the course of the exchange of pleadings and the appellant, in terms of a scheme of arrangement, was appointed as receiver for the creditors of S (Pty) Ltd At the trial the respondent applied for a postponement, which was refused, where after his attorneys withdrew.The trial proceeded by default and the Court found in the appellant's favour, holding that he had established the tacit term alleged and suffered the damages claimed by him.The appellant then applied for leave to appeal against both the refusal of the postponement and the judgment granted by default.Leave was denied in respect of the refusal of the postponement and a further petition to the Chief Justice also failed.In respect of the judgment granted by default, leave to appeal was granted.The appeal came before a Full Bench of a Provincial Division, which granted absolution from the instance in respect of appellant's counterclaim.An application, this time by the appellant, for special leave to appeal to the Appellate Division was granted on petition.The tacit term relied on by the appellant was that 'the plaintiff (respondent) warranted that no obstacle existed which might reasonably delay, interfere with or limit the establishment of a black residential township on the property' (para 2(b)(iii)(aa) of the plea), alternatively that 'he knew of no obstacle which might reasonably have the effects aforesaid' (para 2(b)(iii)(bb) of the plea).The appellant in his plea alleged that the town planners engaged by S (Pty) Ltd 'had, as agents of the plaintiff (respondent), been informed by letter by the Director of Roads during December 1987 that 'the proposed township was affected by the planning of the ..

.road and that further steps in relation to the township should be withheld until the planning of the road had been finalised'.It was further alleged that 'the said information and its consequences were such as to constitute an obstacle which might reasonably delay, interfere with or limit the development of the ..township'.According to the appellant the tacit term relied upon was an imputed rather than actual one, in other words that it was designed to provide for a situation which S (Pty) Ltd had not foreseen at the time the contract was concluded but for which the agreement would clearly have catered had it been so foreseen.The Appellate Division, after having set out the basic principles relating to actual and imputed tacit terms,The Court held, that the tacit term pleaded was, to begin with, not readily reconcilable with the scheme of the agreement: it purported to saddle the respondent with a responsibility and to tie him to a time schedule in connection with the establishment of the township when, with one exception, the agreement otherwise placed no such obligation on him and, as seller, he retained no direct interest in the development of the township as such.

The Court held, further, that there was accordingly no incentive for the respondent to agree to the obligations foisted on him in terms of the alleged tacit term.The Court held, further, that there was in addition a fundamental inconsistency in the appellant's approach: he sought to rely on an imputed tacit term, ie one that arises when both parties would have regulated a certain situation had they thought about it in the manner suggested, yet at the same time he alleged that the respondent must have been aware of the obstacles to the development of the township created by the prospect of the road.

The Court held, further, that if the respondent had been so aware there could be no room for the importation of a tacit term into the contract, for two reasons: first, an imputed tacit term is only read into the contract if both parties overlooked or failed to anticipate the event in question, but in this instance the respondent, on the appellant's approach, was aware of the true state of affairs and deliberately remained silent in order to obtain a contractual advantage, so that an intention based on absence of appreciation could not be attributed to him; and, second, it was inconceivable that the respondent would have agreed to a warranty along the lines suggested if he had been briefed about possible difficulties in the way of the development of the township.

The Court held, further, as to the contention that the above was not a legitimate line of reasoning in the light of the dictum in Administrator, Transvaal v Industrial & Commercial Timber & Supply Co Ltd 1932 AD 25 at 33, that this dictum, to the extent that it fostered the impression that the enquiry was directed at the intention not of the actual parties but of archetypes of reasonable men, was an oversimplification: when the facts show that one party or the other had special knowledge which would probably have had a bearing on his state of mind, that fact cannot simply be ignored, for otherwise the enquiry as to the existence of the tacit term becomes a matter of invention, not intention.The Court held, further, that, if the position was, as contended by the appellant, that the respondent had been aware of the instruction contained in the letter of the Director of Roads, whether he deliberately withheld that information from the appellant or not, it could well be a factor refuting rather than supporting the existence of a tacit warranty

along the lines suggested by the appellant in para 2(b)(iii) of the plea, in which event the appellant would be confined to his defences and remedies based on misrepresentation.

The Court held, further, that the probabilities in the instant case were not such as to defeat the respondent's denial of any personal knowledge of that letter or of any circumstance which could interfere with the appellant's programme for the marketing of the properties in the proposed township, and that if the respondent had indeed been unaware of any such impending disruption of the appellant's plans, it was unlikely that he would have committed himself to the tacit warranty suggested by the appellant in para 2(b)(iii)(aa) of the plea: why should he have been prepared to guarantee a state of affairs of which he had no certainty at the time, over which he had no control and which could conceivably plunge him into an abyss of debt? The Court held, further, that there was no evidence to suggest that the point raised in para 2(b)(iii)(aa) had occurred to anyone, nor could one be confident that if the question had been posed to the parties, the answer would inevitably have been 'of course the warranty in para 2(b)(iii)(aa) would have been furnished, we did not trouble to say that, it is too clear'.

The Court held, further, as for the warranty proposed in para 2(b)(iii)(bb) of the plea, that, if the respondent had been unaware of any obstacle which might interfere with the establishment of the township, as was likely on the facts, the said warranty had not been breached and hence fell away, with the result that it could be disregarded.

The Court held, further, that there were other reasons for rejecting the warranty proposed in para 2(b)(iii)(aa): because the warranty conferred a benefit only on the party in whose favour it is stipulated, such a warranty was ex hypothesi not essential to give 'business efficacy' to the agreement; in addition the mere possibility of a road which might in future traverse the property would not as such affect the operation of the agreement, but would only become a reality if expropriation in fact took place - a post-contractual event which might or might not have contractual repercussions.

The Court held, further, that another consideration having a bearing on the probabilities was the appellant's failure to mention the alleged warranty at the first opportunity (mention thereof was first made in the plea): the very fact that a term supposedly so obvious as to speak for itself escaped the attention of the appellant at the earlier stages of the proceedings was an indication that it was nothing more than an afterthought when it was eventually mooted.

The Court held, further, that there were also the difficulties experienced by the appellant with the formulation of the tacit term: a term so obvious as to occur as a matter of course would most likely be uncomplicated and capable of ready definition, whereas in the instant case a number of terms were pleaded with a number of alternatives.

The Court held, further that, because parties who choose to commit themselves to paper can be expected to cover all the aspects that matter, the Courts are slow to import a tacit term into a written contract, and that this was such a case: not a single compelling reason had been advanced why the tacit terms suggested by the appellant should be drafted into the contract.Appeal dismissed with costs.The decision in the Transvaal Provincial Division in Voges v Wilkins NO (as duly appointed Receiver for the Creditors of Stronghold Construction (Pty) Ltd)1992 (4) SA 764 (T) confirmed.

44. JURGENS EIENDOMSAGENTE v SHARE The appellant, an estate agent, had instituted action in a magistrate's court against the respondent for payment of commission on a transaction which the former had negotiated.The transaction had fallen through.In terms of clause 9 of the contract the respondent, as seller, undertook to pay agents' commission, which was deemed to have been earned upon acceptance of the offer, even if the sale should be cancelled.Clause 2(d) of the contract provided that the purchaser would furnish the respondent with a guarantee of R10000 from the proceeds of the sale of his (the purchaser's) property, before or on 30 March 1984.An acceptable guarantee was not furnished timeously by the purchaser and the respondent cancelled the contract, whereupon the appellant brought its claim for commission.In its particulars of claim the appellant alleged that the sale had been subject to several conditions, inter alia the said condition in respect of the guarantee for R10000, that all the conditions had been complied with timeously, that a valid contract had come into being and that the appellant was therefore, in terms of clause 9 of the contract, entitled to the commission agreed upon.The respondent denied that the condition regarding the guarantee had been complied with and his denial was upheld by the magistrate as well as on appeal to a Provincial Division.In a further appeal, the Court observed that two questions had to be answered, viz whether clause 2(d) in fact contained a suspensive condition and, if not, whether the appellant was entitled to contend to the contrary.As regards the first question, the Court distinguished between a suspensive condition, where a provision in a contract delayed the operation of a specific obligation pending the occurrence or non-occurrence of an uncertain future event, and a term whereby a contractual obligation was placed on a party to render a specific performance before or on a certain date.The Court held, that clause 2(d) contained two components, viz (a) the sale by the purchaser of his property at a sum which would yield the R10000 for the furnishing of the guarantee and (b) the furnishing of the guarantee by 30 March 1984, and that component (a) constituted a true suspensive condition and (b) merely a term.The Court held, further, that in the instant case component (a) had been complied with so that the purchaser was obliged to furnish the prescribed guarantee before or on 30 March 1984.The Court held, further, that on the correct approach (viz that clause 2(d) constituted a term rather than a suspensive condition) the question was not whether the purchaser had in terms of clause 2(d) committed breach of contract vis-à-vis the respondent, but whether the requirements for the coming into operation of clause 9 had been complied with.The Court held, further, that, as clause 2(d) was in essence a term and not a true suspensive condition, the fact that the guarantee had not been furnished on 30 March 1984 did not afford a defence to appellant's claim for commission based on clause 9.The Court held, further, in respect of the question whether the appellant, as a result of the manner in which he had worded and presented his claim, was forced to rely on clause 2(d) as a suspensive condition, that if regard be had to substance rather than form, there existed little doubt that the appellant had relied on clause 9 as his cause of

action and that his actual case was that he had complied with the 'conditions' (ie requirements) of that clause, viz that the sale, clause 9 included, was binding on the respondent - the allegation in his particulars of claim that the 'condition' in respect of the guarantee had been fulfilled was therefore in fact superfluous.The Court held, further, that there was no suggestion in the instant case that the appellant had abandoned his cause of action based on clause 9.The Court held, further, as the respondent had not raised any real defence other than his denial that clause 2(d) had been complied with, that the possibility could not be ignored that he would not have disputed the matter if the appellant's plea had not misled him in this regard, and that he had been prejudiced to that extent - which prejudice had to be made good with an appropriate order as to costs.The Court held, further, that no other real prejudice to the respondent had resulted from the mistaken approach taken in the appellant's pleadings and that the appellant could thus not be barred from relying on clause 2(d) as a term rather than a suspensive condition.G The Court held, accordingly, that the appeal had to succeed.The decision in the Eastern Cape Division in Jurgens Eiendomsagente v Share reversed.

45. DESIGN AND PLANNING SERVICE v KRUGER In the case of a suspensive condition, the operation of the obligations flowing from the contract is suspended, in whole or in part, pending the occurrence or non-occurrence of a particular specified event.A term of the contract, on the other hand, imposes a contractual obligation on a party to act, or to refrain from acting, in a particular manner.A contractual obligation flowing from a term of the contract can be enforced, but no action will lie to compel the performance of a condition.This distinction between a condition and a term is of particular importance in determining the consequences of the non-occurrence of the event postulated in a positive suspensive condition.When a suspensive condition, of a kind which has not been inserted in a contract for the specific benefit of one of the parties only, remains unfulfilled after the lapse of a reasonable time for fulfilment, the contract is discharged automatically, by virtue of an implied term to that effect, unless there is something in the contract negativing the implication of such a term, and subject to the possibility of fictional fulfilment of the condition by reason of the conduct or inaction of either of the parties.Ordinarily, no action on the part of either of the parties equivalent to a placing in mora of the other in relation to the fulfilment of the condition as such, is required before the contract comes to an end.In terms of a building contract the appellant as the contractor had undertaken to erect a dwelling house and outbuildings for the respondent as the employer.In terms of clause 1 the contract price was R 16 950 which the employer had to pay to the contractor (a) as to the sum of R1 000...such amount to be deposited with the contractor on the signing of the agreement; (b) as to the balance...to be provided for by means of a building loan.In terms of clause 2 the contractor was entitled to receive payment from the proceeds of the loan from time to time as stipulated therein.Under clause 20, provided the necessary building society loan had been obtained, the employer was not entitled to withdraw from the agreement.In the event of his doing so, the contractor was entitled to 10 per cent of the contract

price as loss of profits and/or as liquidated damages, ie as a genuine pre-estimate of the losses which the contractor would suffer.The employer had completed a form of application for a building loan addressed to a specific building society, which was handed to the contractor who undertook to lodge it with the building society.About three weeks later the contractor alleged that an incorrect form had been filled in, and the employer filled in another, which the contractor again undertook to lodge.The R1 000 was paid by the employer to the contractor in August, 1970.In January, 1971, the contractor told the employer that the application had been lost and that the building society could find no trace of it.Thereafter the contractor failed to keep an appointment to fill in another application.Finally on 18th February, 1971, the employer addressed a letter to the contractor cancelling the contract and demanding return of the R1 000.He relied on the unreasonable delay in obtaining the building society loan In reply the contractor accepted the cancellation but claimed the 10 per cent liquidated damages, and demanded a further R695 in addition to the R1 000 in its possession.The employer then sued for the R1 000 and the contractor counterclaimed for the R695. A magistrate's court found on the probabilities that the contractor had never lodged the respondent's application with the society.Judgment was granted in favour of the employer with costs, and the counterclaim was dismissed.In an appeal,The Court held, that the contract was subject to a suspensive condition with regard to the obtaining of a building society loan.The Court held, further, that it was an implied term that the loan was to be obtained within a reasonable time, and that a reasonable time had elapsed when the employer purported to resile from the contract.The Court held, further, that the condition could not be held to have been fictionally fulfilled as against the employer, and that the contractor's reliance on clauses 20 and 21 of the contract failed.The Court held, therefore, that the employer had been entitled to resile from the contract.Appeal dismissed with costs.

46. ABSA BANK LTD v SWEET AND OTHERS While the mutual rights of the parties to a contract subject to a suspensive condition relate back to the date of the contract where the suspensive condition is fulfilled, the rights of third parties which they may have acquired in good faith pending the fulfilment of the suspensive condition are not prejudiced by such retroactive operation of the contract.The first respondent had, on 3 August 1990, made an offer to purchase certain property (the premises) from the then owner thereof and the offer was accepted on 10 August 1990.It was a condition of the offer that 'this offer includes all existing tenancies'.The second respondent was a tenant, having been in occupation thereof in terms of an oral lease since 1988.On 15 August 1990 the second respondent signed a written lease with the first respondent in respect of the premises.The written lease was, however, subject to a suspensive condition (clause 15(i)) that the lease was 'to be confirmed by the lessor within 14 days after registration in the lessor's name'.

On 5 October 1990 one V, on behalf of the first respondent, applied to the applicant for a loan of R180 000 against the security of a first mortgage bond over the premises.In the application form V declared that the particulars set out therein were to the best of his knowledge and belief true and correct and that no information which might have affected the applicant's decision had been withheld.In response to a question in the application as to who would occupy the premises, V replied that it would be occupied by the first respondent, and in the space opposite the question 'if tenanted, monthly rental?', the letters 'N/A' appeared.V also agreed on behalf of the first respondent that the latter would be bound by the applicant's 'standard conditions for mortgage loans', one of which was contained in the mortgage bond and provided that the 'mortgagor agrees that the mortgaged property shall not be let for a longer period than one month without the written consent of' the applicant.The loan application was granted and on 16 November 1990 transfer of the premises to the first respondent and registration of the mortgage bond took place.On 20 November 1990 the first respondent endorsed on the lease, as contemplated by clause 15(i) of the lease, the words 'confirmed on 20/11/90'.The first respondent failed to fulfil her obligations under the mortgage bond and on 19 September 1991 the premises were sold by auction in execution of a judgment obtained by the applicant against the first respondent.Clause 5 of the conditions of sale provided that the 'property shall be sold subject to any existing tenancy.If the amount so realised is insufficient to meet the amount owing to the execution creditor, then the property shall be sold free of any tenancy entered into after the registration of the bond ...'.The applicant purchased the property at the sale in execution for an amount which was less than the bond indebtedness of the first respondent to the applicant.The sheriff thereupon endorsed on the conditions of sale that 'in terms of clause 5 above, the property was sold free of any alleged leases'.The applicant thereupon applied in a Provincial Division, inter alia, for the ejectment of the second respondent from the premises.The second respondent, in opposing the application, relied on the written lease with the first respondent, contending that the sale of the premises to the applicant at the sale in execution was subject to her tenancy in terms of the written lease, such lease having been concluded prior to the sale of the property to the applicant and prior to the registration of the bond.The Court held, that, having regard to the fact that the contract of lease was subject to the suspensive condition contained in clause 15(i) of the lease and therefore imperfectum or inchoate until the condition was fulfilled, the real right of the applicant as mortgagee which was created by the registration of the mortgage bond over the premises ranked in preference to the real right of the second respondent as lessee.The Court held, further, that the second respondent's right was deemed to have come into existence retroactively or in accordance with the fiction of retroactivity, but it was not established until the suspensive condition was fulfilled: until then it was uncertain, whereas the applicant's right as mortgagee was firmly and certainly established when the bond was registered.The Court held, further, that, as the rights of the applicant, as a third party in relation to the lease, were not prejudiced by the retroactive operation of the lease brought about by the fulfilment of the suspensive condition, the consequences of a lease subsequent in time to the mortgage bond followed and, as the highest bid, when the premises were

sold in execution, did not cover the mortgage debt, the property was correctly sold free of the lease.The Court held, further, that there was no basis for holding that the applicant knew of the existence of the lease at the time the mortgage was entered into.The Court held, accordingly, that the applicant was entitled to an order for the ejectment of the second respondent.

47. MELAMED AND ANOTHER v BP SOUTHERN AFRICA (PTY) LTD

The appellant, as seller, and the respondent, as purchaser, had concluded an agreement of sale, the coming into operation of which was conditional upon the fulfilment of a suspensive condition that the owner and/or seller procure all the requisite rights and permits needed for the erection of a garage, petrol filling and service station on the relevant property.The respondent had believed, which belief was based on information supplied by the appellants' attorneys and the town planner, that the suspensive condition had been fulfilled and had paid the purchase price.In fact the city council for the area where the property was situated had refused permission to apply for the re-zoning of the site to enable a service station to be erected on it.Upon receiving the title deeds, it became clear to the respondent that the suspensive condition had not been fulfilled and it communicated to the appellants that it would enforce its remedies, including an order for restoration.

On 9 March 1993, the respondent launched an application in a Local Division seeking the repayment of the purchase price with interest, which was served on 11 March 1993.Answering and replying affidavits were filed and, as certain disputes of fact had arisen on the papers, the matter was referred to trial on 28 February 1995 and the notice of motion was ordered to stand as a summons.The respondent served a declaration on the appellants on 13 April 1995, basing its claim for repayment on the fact that it had paid the purchase price in the bona fide and reasonable but mistaken belief that the suspensive condition had been fulfilled and that the payment was due.The declaration did not include a claim based on the termination of the contract, although one had been included in the founding papers to the motion proceedings.On 29 March 1996 a notice of amendment was served on the appellants articulating the main claim as follows: pursuant to an agreement of sale, the appellants had transferred the property to the respondent and the respondent had paid the purchase price; despite the passage of a reasonable time, the suspensive condition contained in the agreement had not been fulfilled; the agreement had been discharged after the lapse of a reasonable time, alternatively had been terminated on 22 May 1992 at the instance of the respondent and after the lapse of a reasonable time.The respondent further tendered retransfer of the property against repayment of the purchase price.The content of the original declaration formed claimin the notice of amendment.The appellants responded to the respondent's amended declaration by filing a special plea alleging, inter alia, that the amendment introduced new causes of action, that prescription in respect of the claims made by the respondent had not been interrupted prior to the grant of the amendment on 26 April 1996, that each of the respondent's claims had been due for payment prior to 26 April 1993 and that the respondent's claims

had prescribed in terms of the Prescription Act 68 of 1969 (the Act).The appellants relied on the wording of s 15(2) of the Act in contending that the respondent had not 'prosecuted' its claim under the process in question to final judgment by not including in the original declaration a claim based on the contract having terminated.The amendment sought more than three years after the debt had arisen could not cure the position.Any interruption of prescription had accordingly lapsed.The Court a quo found that the fact that the respondent had not in its original unamended declaration relied on facts stated in its founding affidavit in the motion proceedings did not constitute a waiver or abandonment on the part of the respondent, that any reliance on s 15(2) of the Act, dealing with the lapsing of an interruption of prescription, was misplaced as the section only applied if a creditor did not successfully prosecute his claim to final judgment or if the judgment was abandoned or set aside and that, in any event, the contents of the amended declaration simply expanded and elaborated on the cause of action initially pleaded.The appellants' special plea was accordingly dismissed with costs.In an appeal to a Full Bench,The Court held, that in referring the matter to trial and ordering the notice of motion to serve as a summons, the Court was doing no more than ordering the pleading concerned to take the place of a summons as defined in Rule 17 of the Uniform Rules of Court.The notice of motion was no more than a statement of what the respondent was claiming and did not constitute a summons within the meaning of Rule 17.The requirements were only met when the affidavits accompanying the notice of motion were also considered.It was on the basis of the motion proceedings, including the founding affidavit, that prescription was interrupted and it was therefore the claim contained in those proceedings which was relevant.Even if the appellants were correct in their view that the amended claim constituted a cause of action different from any contained in the original declaration, there could be no doubt that the respondent's amended main claim was in accordance with the contents of the founding affidavit.

The Court held, further, that it was clear that the respondent had, realising that its claim had not been properly expressed, amended it to reflect what had been stated in the motion proceedings.In this manner it had done no more than prosecute its claim in the context of s 15(2) of the Act and prescription was therefore not an issue.The long delays between pleadings in the matter had no effect on the question of whether the respondent had prosecuted its claim for the purposes of s 15(2).Prescription had been interrupted and remained interrupted.

The Court held, further, that the agreement between the parties had become effective immediately but its operation had been suspended pending the fulfilment of the condition.Where there had been performance pursuant to a contract subject to a suspensive condition pending the condition being fulfilled, parties had to restore what they had received as performance if the condition was not fulfilled and the agreement discharged as a result.Although there had been no reference to the enrichment remedies claimed in the original declaration, that declaration did refer to the agreement, the suspensive condition and the payment of an amount not due.Those averments foreshadowed the enrichment remedies documented in the amended

declaration.Appeal dismissed.

48. SCHLINKMANN v VAN DER WALT AND OTHERS As defendants had failed to vacate the leased premises, the plaintiff issued summons for ejectment and damages for holding over.The defendants resisted the claim, but as the result of negotiations, during which time the defendants remained in occupation of the premises, an agreement was arrived at which was made an order of Court.This agreement provided that (1) 'a lease be entered into for 15 months from 1st June, 1946, terminating on 31st August, 1947.(2) Rental to be £150 for the whole premises, reduced proportionately according to the extent of the premises occupied by the plaintiff.A committee consisting of an architect appointed by each party with Mr.Brown and Mr.de Waal (the attorney of the plaintiff and the defendants respectively) to agree upon such extent.(3) Defendant to pay £300 for all wooden articles, such as shelving, tables, etc., that have been or are now in the premises.(4) Defendant to pay party and party costs.(5) Lease to be drawn by Mr.Brown to incorporate the usual terms.(6) Settlement to be in full and final settlement of the whole dispute.' The extent of the premises were ascertained and the rental calculated and agreed upon as being £119 per month.Defendant having failed to pay this rental in full, the plaintiff instituted proceedings to recover the amount of rent due, together with the £300 contained in Clause (3) and costs.Defendants pleaded that the terms of the agreement were mutually dependent; that it was an essential condition of the agreement that a lease for 15 months should be entered into and that the plaintiff's attorney would draw up such lease for signature of the parties to incorporate the usual terms.They averred that the plaintiff had in breach of the agreement endeavoured to insert unusual and unreasonable terms, which they had refused to accept.In his replication, the plaintiff admitted that the agreement was in full and final settlement of all disputes, denied that he had submitted a lease which contained unusual or unreasonable terms or that any breach of the settlement had been committed.The Court held, that clause 5 contemplated that a written lease would be drafted.The Court held, further, that it was never contemplated or intended that this clause was so vital or essential a term, as to suspend entirely the operation of the settlement and preclude the plaintiff from claiming performance by the defendants of their obligations thereunder until the written lease had been drawn.The Court held, further, that the onus of establishing that the obligations contained in the settlement were so suspended, was on the defendants.The Court held, further that as the facts showed that the parties were ad idem on all the material terms of the lease, and as there was no express provision suspending its operation until a written lease had been signed by the parties, it should be taken that the only purpose of clause 5 was for convenience of record and facility of proof, and that all it meant was that the defendants desired a formal lease to be drawn up containing

the usual provisions for the smooth working of the arrangements, and that plaintiff was willing that this should be done.The Court held, further, that the history of the transaction and the earlier relationship of the parties could be taken into consideration in determining what the parties had in mind when entering into clause 5.The Court held, further, that in the event of a dispute it was for the Court to decide what the 'usual terms of a lease' are.The Court held, further, that if it could be shown that in the earlier lease between the parties, there had been included clauses similar to some of those to which objection had been taken at the trial, and that defendants had accepted such covenant in the earlier lease without objection and had enjoyed continuous occupation of the premises thereunder, that would at least be some evidence to prove, not only that the defendants' objection at the trial to such clauses was not of much weight, but that plaintiff's action in proposing to include them in the new lease was not a deliberate and dishonest breach of the settlement, but was due to a bona fide impression on his part that these were 'usual terms'.Repudiation is in the main a question of the intention of the party alleged to have repudiated.The onus of proving that the one party had repudiated the contract is on the other party who asserts it.The refusal to act upon what is subsequently held to be a proper interpretation of a minor provision of a contract does not amount to a repudiation.

49. CULVERWELL AND ANOTHER v BROWN A repudiatory breach of contract is one which justifies the injured party in resiling from the contract.The test whether conduct amounts to repudiation of a contract is whether, 'fairly interpreted', such conduct 'exhibits a deliberate and unequivocal intention no longer to be bound' by the contract.The appropriate time at which to calculate damages for breach of an agreement is at the time for performance specified in the agreement breached.Where, however, no time for performance is specified in the agreement, different considerations apply.Where a party to an agreement (in which no time for performance has been specified) repudiates the agreement, such repudiation does not per se bring the agreement to an end.At the date of repudiation, the agreement is still alive, and the injured party has the right to elect whether to accept the repudiation and so terminate the agreement, or whether to insist upon receiving performance in terms of the agreement.The injured party is afforded a reasonable period within which to make the election.During that period, the repudiator's obligation to perform and the injured party's right to receive performance remains wholly unaffected.It is only when the injured party accepts the repudiation that the agreement is cancelled, and it is only then that a claim for damages arises.The principle applicable to the assessment of damages is that the injured party is to be placed in the position he would have occupied had the agreement been fulfilled.This entails a comparison between the notional position and the actual position ensuing upon non-fulfilment.It would be entirely artificial to relate the assessment of damages to the date of repudiation, because at that date the agreement would still have been in existence, and

a claim for damages would not yet have arisen.Furthermore, during the period which the injured party is afforded to consider his election, there may be considerable fluctuations in the value of the subject-matter of the agreement, and the comparison cannot properly be made until the injured party's final position can be assessed.Therefore, the application of the ordinary rules relating to repudiation and acceptance thereof, coupled with the fundamental principle that the innocent party is to be placed as far as possible in the position he would have occupied had the agreement been fulfilled, inevitably leads to the conclusion that damages cannot appropriately be assessed in relation to the time of repudiation.It does not, however, follow that the assessment should in all cases of an accepted repudiation be made in relation to the time of acceptance.It would, for example, be inappropriate where the res vendita is resold or similar goods repurchased because in that event, provided there has been no undue delay in the acceptance or in the resale or repurchase, it is the price fetched on resale or paid for similar goods in the market which has to be taken into account.The respondent had sold certain immovable property to the second appellant company and the first appellant had bound himself as surety and co-principal debtor for the due performance by the second appellant of its obligations under the deed of sale.On 6 December 1984 the second appellant repudiated the agreement of sale.The respondent resold the property on 15 March 1985 and informed the appellants that he had accepted the repudiation on 18 March 1985.In an action for damages the respondent claimed the difference between the amount at which the property had been sold to the appellants and the lesser amount which he had obtained on resale.At the trial, the respondent had tendered evidence to the effect that property prices in the area in which the property was situated had dropped steeply since the end of 1984, and that the price at which the property had been resold had been higher than the value of the property at the time.The appellants had not disputed that evidence.The trial Court had also found that there had been no undue delay in the respondent's acceptance of the appellant's repudiation of the agreement.An appeal to a Full Bench in a Provincial Division against the trial Court's award of damages was dismissed.In a further appeal, the main issue was whether damages should be calculated at the date on which the appellants had repudiated the agreement, or whether damages should be calculated at the date on which the respondent had accepted the repudiation.The appellants had argued that damages should be calculated at the date of repudiation and, since there had been no evidence of the value of the property in December 1984, that the respondent's claim should have been dismissed for failure to prove damages.The Court held, that the principle being that the difference between the contract price and the price ruling on the date when the property is resold or a similar property is bought can be recovered by way of damages provided there was no undue delay in reselling or repurchasing, that since there had been no undue delay on the respondent's part in reselling the property and the property had been resold at a price in excess of its then current market value, his claim for damages had rightly been allowed.The decision in the Cape Provincial Division in Culverwell and Another v Brown1988 (2) SA 468 confirmed.

50. DATACOLOR INTERNATIONAL (PTY) LTD v INTAMARKET (PTY) LTD

Where one party to a contract, without lawful grounds, indicates to the other party in words or by conduct a deliberate and unequivocal intention no longer to be bound by the contract, he is said to 'repudiate' the contract.Where that happens, the other party to the contract may elect to accept the repudiation and rescind the contract.If he does so, the contract comes to an end upon communication of his acceptance of repudiation and rescission to the party who has repudiated.The test for repudiation is not subjective but objective.The emphasis is not on the repudiating party's state of mind, on what he subjectively intended, but on what someone in the position of the innocent party would think he intended to do; repudiation is accordingly not a matter of intention, it is a matter of perception.The perception is that of a reasonable person placed in the position of the aggrieved party.The test is whether such a notional reasonable person would conclude that proper performance (in accordance with a true interpretation of the agreement) will not be forthcoming.The inferred intention accordingly serves as the criterion for determining the nature of the threatened actual breach.A repudiatory breach may be typified as an intimation by or on behalf of the repudiating party, by word or conduct and without lawful excuse, that all or some of the obligations arising from the agreement will not be performed according to their true tenor.Whether the innocent party will be entitled to resile from the agreement will ultimately depend on the nature and the degree of the impending non- or malperformance.The conduct from which the inference of impending non- or malperformance is to be drawn must be clearcut and unequivocal, ie not equally consistent with any other feasible hypothesis.Repudiation is 'a serious matter', requiring anxious consideration and - because parties must be assumed to be predisposed to respect rather than to disregard their contractual commitments - not lightly to be presumed.

The so-called 'acceptance' of the repudiation by the innocent party, although a convenient catchword, does not 'complete' the breach but is simply the exercise by the aggrieved party of his right to terminate the agreement.The innocent party to a breach of contract justifying cancellation exercises his right to cancel it (a) by words or conduct manifesting a clear election to do so (b) which is communicated to the guilty party.Except where the contract itself otherwise provides, no formalities are prescribed for either requirement.Any conduct complying with those conditions would therefore qualify as a valid exercise of the election to rescind.In particular, the innocent party need not identify the breach or the grounds on which he relies for cancellation.It is settled law that the innocent party, having purported to cancel on inadequate grounds, may afterwards rely on any adequate ground which existed at, but was only discovered after, the time.Since the election to cancel, provided that it is unambiguous, need not be explicit but may be implicit and since the cause for cancellation need not be correctly identified and stated, it follows that the actual communication of the decision to cancel, once made

and manifested, may be conveyed to the guilty party by a third party.

A distribution agreement between the parties contained a clause that the agreement could be terminated on 12 months' notice to the other party.The appellant had written two letters to the respondent, informing it that the agreement was being terminated, with one of the letters inviting the respondent to agree upon a 'mutually convenient date in the near future and come to some arrangement regarding the stocks' the respondent held.The respondent, inter alia, entered into a new distribution agreement with a competitor of the appellant and sent a document, entitled 'Important agency announcement', to its customers, in which it announced its new distribution agreement.This document was sent to the appellant by a third party, although there was no direct communication with the appellant, until after the appellant's attorneys had informed the respondent that it had repudiated the agreement.The respondent contended that the appellant had repudiated the agreement by sending it the letters, which it averred cancelled the agreement without giving the requisite 12-month notice period.The trial Court had held that the respondent had not communicated its acceptance of the repudiation to the appellant and therefore could not rely on it.The respondent appealed and a Local Division had held in its favour.In a further appeal,The Court held (per Nienaber JA, Vivier JA, Zulman JA and Mthiyane AJ concurring; Scott JA dissenting), that the dominant notion which the letters conveyed had been that the distributorship had been irrevocably terminated and that no further orders for the plaintiff's products would be executed; only the actual winding-up of their affairs remained open for discussion.The two letters, read together against the background of the prior exchanges between the parties, would have conveyed to the reasonable person looking at the matter from the perspective of the respondent that the termination of distributorship had been a fait accompli and that no notice in terms of the agreement would be forthcoming, regardless of how the respondent responded to the invitation contained in the letters.The dominant message which the two letters had conveyed had been that the respondent would not have enjoyed at least a further 12 months before the agency agreement with the appellant was brought to a conclusion.That had been tantamount to an unequivocal intimation on the part of the appellant that it had not proposed to perform its part of the agreement for the remainder of the stipulated notice period.As such it had been a wrongful repudiation of sufficient seriousness as to justify cancellation of the agreement by the respondent.The Court held, further, that in the instant case the respondent, by circulating the agency announcement, had made its attitude plain for all the world to see.It had regarded its agreement with the appellant as having come to an end.That decision and the respondent's conduct pursuant thereto had been bound to come to the plaintiff's attention.On the facts of the case it was, accordingly, of no significance that the agency announcement had not been sent to the appellant by the respondent but by a third party.The agency announcement had been at odds with a continuation of the agreement by the respondent.As such it constituted, to the knowledge of the appellant, a clear and unequivocal manifestation by the respondent of its attitude that, in response to the appellant's letters of termination, the contract was finally at an end.

Appeal Dismissed.

The decision in the Witwatersrand Local Division in Intamarket (Pty) Ltd v Datacolor International (Pty) Ltd confirmed.

51. TUCKERS LAND AND DEVELOPMENT CORPORATION (PTY) LTD v HOVIS

It could be said that it is now, and has been for some time, felt in our domain, no doubt under the influence of the English law, that in all fairness there should be a duty upon a promisor not to commit an anticipatory breach of contract, and such duty has in fact often been enforced by our Courts.It would be consonant with the history of our law, and also legal principle, to construe this as an application of the wide jurisdiction to imply terms conferred upon a court by the Roman law in respect of the judicia bonae fidei.It should therefore be accepted that in our law an anticipatory breach is constituted by the violation of an obligation ex lege, flowing from the requirement of bona fides which underlies our law of contract.It would also be desirable, in order to obtain clarity of thought, to jettison the terminology of offer and acceptance in this regard, and to denote a creditor's decision to act upon an anticipatory breach not as an 'acceptance' but as an election.In terms of a written contract of sale appellant had sold two erven in a proposed township to the respondent.After paying a considerable sum in terms of the contract, respondent became aware that appellant, who was also the township developer, had run into difficulties in obtaining proclamation and as a result thereof had prepared a new plan for submission to the proper authorities and on which plan respondent's erven had disappeared, being superseded by a school site.Respondent successfully sued the appellant in a Local Division for the repayment of the money he had paid in terms of the contract.In an appeal, The Court held, that, in regard to the question as to whether appellant had committed an anticipatory breach of the contract, the inquiry was whether appellant had repudiated the contract; it being unnecessary to decide whether there were other ways of committing an anticipatory breach.The Court held, further, approving the dictum of DEVLINin Universal Cargo Carriers Corporation v Citati (1957) 2 QB 401 at 436, that the question was whether the appellant had acted in such a way as to lead a reasonable person to the conclusion that he did not intend to fulfil his part of the contract.The Court held, further, that the 'reasonable person' had to be placed in the position of the respondent.The Court held, further, that it would have been obvious to such a person that, in an attempt to obtain proclamation of the township by submitting the new plan for approval, the appellant was sacrificing the respondent's rights to transfer of the erven.The Court held, further, that it followed that appellant did commit an anticipatory breach of the contract.The Court held, accordingly, as such breach related to the whole of the contract, that the respondent was entitled to rescind and to claim back what he had paid.Appeal dismissed.

52. HAYNES v KINGWILLIAMSTOWN MUNICIPALITY Although the Court will as far as possible give effect to a plaintiff's choice to claim specific performance, it has a discretion in a fitting case to refuse to decree specific performance, and leave the plaintiff to claim and prove his id quod interest.The discretion which a Court enjoys, although it must be exercised judicially, is not confined to specific cases, nor is it circumscribed by rigid rules.Each case must be judged in the light of its own circumstances.Where the cost to the defendant in being compelled to perform is out of all proportion to the corresponding benefit to the plaintiff and the latter can equally well be compensated by an award of damages, the hardship of the contract at the time it was concluded is not decisive of the matter; the matter may also be judged of at the time performance is claimed.Where respondent Municipality was bound by an agreement with appellant to release 250,000 gallons of water a day from their storage dam while an unprecedented drought continued and when an order of specific performance would result not only in great hardship but in positive danger to the health of the community to whom respondent owed a public duty to render an adequate supply of water, whereas there was no indication that appellant had suffered any damage from respondent's refusal to do so,The Court held, that no ground had been shown to justify the Court in interfering with the discretion exercised by the Court a quo in refusing specific performance.The decision in the Eastern Districts Local Division in Haynes v Kingwilliamstown Municipality, 1950 (3) SA 841, confirmed.

53. BENSON v SA MUTUAL LIFE ASSURANCE SOCIETY The granting of an order of specific performance is entirely a matter of the discretion of the Court in which the claim is made and, apart from the rule that such discretion is to be exercised judicially upon all the relevant facts, no rules should be prescribed to regulate such discretion - such rules would inevitably curtail the Court's discretion and would negate or erode the plaintiff's right to select his remedy.The English rules regulating their Courts' discretion to order specific performance are predicated upon that remedy being available by way of equitable relief only; they are inappropriate in our law and the indiscrimate following of English cases in this regard is to be decried.The decision of the Cape Provincial Division in SA Mutual Life Assurance Society v Benson (granting an order of specific performance in an action for delivery of shares freely obtainable on the Stock Exchange) confirmed.

54. SANTOS PROFESSIONAL FOOTBALL CLUB (PTY) LTD v IGESUND AND ANOTHER

The instant appeal concerned the right of the Court to order specific performance of a contract for personal services.The first respondent, a football coach, had entered into a coaching contract with the appellant club.The contract provided that a breach by either of the parties entitled the other either to cancel the contract and claim damages or to claim specific performance.Before the expiry of his contract, the first respondent was made a more lucrative offer

by the second respondent, and proceeded to give the appellant notice of termination.The appellant elected to enforce the contract and sought: (1) a declarator that the contract was binding on the parties; (2) an order compelling the first respondent to continue serving as head coach of the appellant's football team; and (3) an order restraining the second respondent from taking any action designed to induce the first respondent to breach the contract.The Court held, that it was clear that the first respondent's principal reason for leaving the appellant was that he had secured a better contract.This was relevant because there was an important distinction between a wrongfully dismissed employee and one who resiled unlawfully from his contract of employment.The Court held, further, that the first respondent was no ordinary servant of the type in respect of whom the English Courts refused to order specific performance, but a party contracting on equal terms with his employer and able to command a high sum of money in doing so.The Court was also not being asked to order specific performance against an employer, but to declare that a contract was binding and to allow the applicant to proceed to enforce its contract against an unwilling employee who wished to earn more money elsewhere.The Court held, further, that it was generally accepted that it was an injured plaintiff's right to elect whether to hold a defendant to his contract or claim damages for breach.The first respondent had no right to prescribe how the plaintiff would make the election provided by law.

The Court held, further, that the English common law regarded specific performance as supplementary to the remedy of damages.It was never granted where damages provided adequate relief.The rule was based on public policy and the feeling that it was improper to make a person serve another against his will.South African law, in contrast, regarded specific performance as a primary, not supplementary, remedy.

The Court held, further, that while the first respondent might not want to go back to coach the appellant's team, an order of specific performance would not amount to compelling him to do something against his will.The fact that relations between the applicant and the first respondent had soured did not detract from the basic point that the first respondent had chosen to break the contract and thereby brought all the subsequent unpleasantness between him and the applicant upon himself.The Court held, further, that there was no inequity in obliging the first respondent to adhere to his contract.Only the appellant, who had chosen to take the risk of bringing an application for an order of specific performance, would be prejudiced if the first respondent did not perform properly.It that event it had several remedies at hand, the most obvious of which was to stop paying him.

The Court held, further, as to the view that it would not be possible to determine whether the first respondent was functioning optimally, that the Court had a discretion and would refuse specific performance only if it would operate 'unreasonably hardly on the defendant, or where the agreement giving rise to the claim [was] unreasonable, or where the decree would produce injustice, or would be inequitable under all the circumstances' (Haynes v Kingwilliamstown Municipality 1951 (2) SA 371 (A) at 378H - 379A).

The appellant could not be denied its ordinary remedy simply because of the possibility that first respondent might not perform properly, which was a factual issue that would arise only in the futureThe Court held, further, that it was clear from Brisley v Drotsky 2002 (4) SA 1 (SCA) at para [94] that Courts should be slow in striking down contracts or declining to enforce them, and should, in specific performance situations, refuse performance only where a recognised hardship to the defaulting party had been proved.Practical considerations such as the impossibility of measuring the first respondent's performance did not meet the proper test.

The Court held, further, that the Court a quo failed to apply the principle of election and the primary right to specific performance.It also did not appreciate the import of the remark in Brisley v Drotsky in favour of upholding contracts as opposed to striking them down.These failures amounted to misdirections and an approach on the wrong principles.

The Court held, further, as to the relief sought against the second respondent, that there was nothing to prove that it had induced the first respondent to break his contract.The fact that the second respondent had made an offer did not in itself prove an inducement.The Court a quo therefore correctly refused to make an order against the second respondent.The Court held, accordingly, that the appeal against the first respondent had to succeed and that against the second respondent to fail.There existed a binding agreement between the appellant and the first respondent, who had to continue serving as head coach of the appellant as dictated by the agreement.The decision by the single Judge in Santos Professional Football Club (Pty) Ltd v Igesund and Another 2002 (5) SA 697 (C) reversed in part and confirmed in part.